Existing research has overlooked the interaction of debt in the financial assessment of asset-light strategies. This research assesses how financial leverage (high or low long-term debt) interacts with management contracts as well as franchising to exert an impact on the value of hotel companies. Panel data of 195 observations in 2007-2019 were analysed with ordinary least square, robust regression, stepwise regression and quantile regression. The research findings clarify the impacts of asset-light strategies by differentiating the previously discovered U-shaped impact into a U-shape for management contracts and an inverted U-shape for franchising. Furthermore, when financial leverage is introduced, the above relationships hold at a low leverage level; but are weakened at a high level. Lastly, these U-shapes are asymmetrical, being more responsive to asset-light strategies than when there is no leverage interaction. This research hence clarifies agency costs and their relevance to asset-light strategies with varying financial leverage.
