Asset-heavy orasset-light? Financial performance implications in the luxury hotel industry

The goal of this paper is to investigate the financial performance implications of asset-heavy versus asset-light strategies in the luxury hotel segment, focusing on a post-COVID market environment. With luxury hotels traditionally emphasizing physical infrastructure and brand alignment, the choice between owning and leasing assets has become increasingly significant, especially in a turbulent economic environment. Asset-light models, pioneered by global players like Marriott, promote flexibility, faster expansion, and capital efficiency, while asset-heavy models offer greater control and long-term value creation. Based on a dataset of 64 Serbian four- and five-star hotels, this study analyzes financial data from 2022 to 2024 with 192 units of observation. Key financial indicators such as net margin, gross margin, ROA, and ROE were used to assess performance. The results indicate that asset-light hotels tend to show higher average profitability and return on equity, though median values suggest modest returns across both models. The findings support the argument that asset-light models can enhance financial flexibility and efficiency in uncertain economic conditions, but may also come with limitations.