Specialization and performance in private equity: Evidence from the hotel industry

Christophe Spaenjers and Eva Steiner

Journal of Financial Economics, 2024, vol. 162, issue C

Abstract: Using granular data on U.S. hotel investments over the past two decades, we show that industry-specialist PE firms achieve higher net income from operations and higher capital gains from sale than generalist PE firms for comparable properties. Those results are driven by specialists implementing more and larger cost savings without compromising revenues. Fundamentally, specialists utilize their hotel-specific operating expertise to produce superior performance outcomes. We show that specialists across investment sectors possess deeper industry-specific operating expertise. Our results suggest that specialist PE firms can compete with their generalist rivals by leveraging such expertise in a chosen market niche.

Keywords: Private equity; Investment performance; Firm ownership; Real estate (search for similar items in EconPapers)
JEL-codes: G11 G24 G32 R33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:162:y:2024:i:c:s0304405x24001533

DOI: 10.1016/j.jfineco.2024.103930

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