Initial Public Offerings in the Hospitality Industry

An analysis finds that initial public offerings of stock (IPOs) in hospitality companies over the past 20 years have been underpriced at a level similar to that of the overall IPO market. However, the degree of underpricing for lodging-casino firms was significantly greater than the level in the overall market, and seems to be related to the perception that investing in a lodging company entails greater risk than other kinds of businesses. The long-run performance of IPOs in the hospitality industry is better than that of IPOs in the overall market. For a holding period of one year, IPOs in the hospitality industry outperformed the benchmark Standard and Poor's 500 average.