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Hospitality Investment Return, Risk, and Performance Indexes: a Ten-Year Examination

William F. Harrah College of Hotel Administration University of Nevada, Las Vegas

While hospitality research has focused primarily on the producer and consumer sides of the industry, little academic attention has been devoted to investor interests. This study reviewed the risk and return of investment in three sectors of the hospitality industry-hotels, casinos, and restaurants-over a ten-year period (1983-1992). Two performance measures of portfolio-Shatpe's Index and Treynor's Index-were used to compare the in vestment performances of the three sectors in two sub-periods : during the recent recession and before the recession. Findings show that the casino sector was the best performer, followed by the restaurant sector, and then the hotel sector. Although the casino sector offers attractive investment opportunities for hospitality entities willing to take risk, the hotel industry may have to wait for demand to catch up with supply.

Key Words: Key Words: hospitality investment • sector • risk • return • performance index • recession.

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