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| Author: | Michailidis, A. |
| Title: | Managing tourism investment opportunities under uncertainty: a real options approach |
| Journal: | International Journal of Tourism Research
2007 : VOL. 8:5, p.381-390 |
| Index terms: | monte carlo technique tourism net present value uncertainty |
| Language: | eng |
| Abstract: | This paper provides an empirical example of the valuation of real options in large-scale tourism project. The main aim of this article is to elaborate the investment decisions process in the evaluation of a ski centre enlargement project by employing elements of the real options methodology. Monte Carlo simulation was used to value the options as it offers the flexibility to directly simulate the uncertainty factors. Traditional discount cash flow analysis points the investment as profitable, although the real options approach proves it as not economically feasible. |
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