Since 2008, U.S. hotels have lost approximately $8 billion in market value. At the same time, online travel agency giant Expedia has gained about $4 billion in market value. The Expedia organization includes Hotwire, Trip Advisor and Hotels.com, in addition to the Expedia brand. What’s been bad news for hotel owners has been good for Expedia shareholders. Are the opposite trends related?

Correlation doesn’t prove causation, so let’s look at the math. In 2011, there are approximately 4.83 million hotel rooms in the U.S. (according to Smith Travel Research), worth an average of $88,215 per room (per the Penn State Index of U.S. Hotel Values), or $426.08 billion, total. In 2008, there were about 4.63 million rooms worth an average $93,752 per room, or $434.07 billion—$7.9 billion greater than today. Even with 201,000 more hotel rooms today than three years ago, the total value of U.S. hotels is actually down nearly $8 billion.

Recently in 2011, Expedia had approximately 290 million shares outstanding at a price of about $23 per share, for a total market capitalization of $6.67 billion. Similarly, in its year-end 2010 financial statements, Expedia reported assets of about $6.65 billion, most of which it attributed to goodwill. In 2008, Expedia had a market capitalization of $2.36 billion, or about $4.3 billion less than today. In addition to Expedia’s total market value more than doubling in that time period, its average share price more than doubled as well.

Expedia represents a good “OTA index” because of its ownership of multiple different OTA platforms, but it isn’t the only OTA that could be influencing hotel market values. Priceline is another huge OTA, but unlike Expedia, its market value hasn’t doubled since 2008: Its 2011 value is eight times what it was in 2008. In fact, Priceline is now larger than Expedia in total market capitalization. Also, its current average share price is about eight times greater than it was in 2008.

How can OTAs really affect hotel market values? As an illustration, if an average 15% hotel room commission/discount is paid by hotels to OTAs, and an average of 25% of occupied rooms are booked on OTAs, then the negative effect on average daily rate is 3.75%, or .0375 (15% x 25%). According to PricewaterhouseCoopers, the 2011 U.S. ADR is $103.08, and if we multiply that figure by .0375, the overall OTA effect on ADR is $3.87 ($103.08 x .0375). Research I conducted at Penn State shows each $1 in ADR is correlated with $809 in hotel value per room, so the OTA effect on value is $3,131 per room ($809 x $3.87). Multiplying $3,131 per room times the 4.83 million rooms in the U.S. equals an overall negative OTA effect on total U.S. hotel market value of $15.12 billion. It’s important to mention these calculations assume OTAs don’t generate significant incremental business for hotels, or sell rooms at relatively high rates, but rather tend to accommodate reservations that could have been booked on other channels, such as hotel chain websites. It’s also important to note some portion of business booked on OTAs has probably replaced business that used to be booked through conventional travel agents, though those agents usually charged lower commissions.

If we use 2007 rather than 2008 as the basis for hotel values, the recent negative trend in values appears even more drastic because hotels were worth more in 2007 than 2008. In all candor, though, OTAs were worth more in 2007 than 2008, too. It seems the exuberance affecting hotel values in 2007 also affected OTA share prices on the stock market. It’s worth pointing out OTAs sell airline seats and rental cars too, so OTAs have benefited and grown from trading in more than hotel rooms.

What do these figures mean for investors? Modern portfolio theory suggests investing in multiple different assets whose recent values have tended to move in opposite directions. Hotel owners who invested in OTAs over the past few years, for example, have been able to mollify the effects of their hotel value losses. While it’s difficult to predict future market values of OTAs, it’s clear that their business model thrived during the previous recession, and they sure aren’t going away any time soon.

Overall, hotel values are expected to grow by 12.6% in 2011. Luxury hotel values are expected to grow by approximately $34,000 per room this year, a significant increase, but still bringing values nowhere near the peak of 2007.

Upper upscale, upscale, midscale, and economy hotels are all expected to register healthy increases in value this year, with economy hotels expected to record a particularly notable 15.4% increase. Again however, these values are all expected to be below their 2007 peaks.

John W. O’Neill, MAI, CHE, Ph.D., is managing director of Hospitality Advisory Services, LLC, and associate professor in the School of Hospitality Management at The Pennsylvania State University. He can be reached at jwo3@psu.eduor 814-863-8984.