Abstract
Over the last 25 years, many hotel operators have chosen to lease their property instead of owning as a financing strategy. This paper examines the combined and separate contributions of business cycles and a firm's level of long-term debt on hotel owner/operator use of operating leases. The results indicate that operating leases were used more often during contracting business cycles and less often during cycles of expansion. According to the results, operating leases and long-term debt are not complementary, although they are increasingly treated as complements when the economy suffers a downturn.
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