Valuation of Intangible Assets for Publicly Traded Hotel Firms in the US

This study provides value estimates for intangible assets of publicly traded hotel firms in the United States, approaching from both time-series and cross-sectional perspectives. When evaluating a firms tangible and intangible assets, tests of model usefulness reveal it is meaningful to decompose adjusted income (AI), measured by revenue minus expense in this study, into adjusted income derived from intangible assets (AII) and adjusted income derived from tangible assets (AIT). Specifically, a significant difference exists for contributions from AIT and AII to a firms market value of equity. Further, decomposing AI into AIT and AII releases incremental information to the market. Finally, it appears that the crude approach frequently employed by practitioners, namely, the value of a firms intangible assets equals its market value of equity plus liabilities minus book value of tangible assets, systematically overestimates values of firm intangible assets, assuming firms apply uniform capital structures across their tangible and intangible assets.