1、Understanding Hotel Valuation TechniquesOctober 2015Objectives‹‹‹‹‹‹Why do we do valuations?Why hotel are different from any other real estate?What isvalue?Understanding hotel valuation techniquesConclusion: what is important to have in order to produce agood hotel valuatio
2、n?ConclusionWhy do we do valuations?Because:‹companies in the stock‐exchange market need to update thevalue of their assets every year;‹hotel owners might be going to a bank toask for a loan offeringthe hotel as collateral;‹hotel investors might be interested in purchasing
3、a specifichotel;‹hotel owners might be willing to sell their hotel;‹A company would like to merge with another companyandneed to understand how much capital they are bringing throughtheir assets;‹Many other reasons…Why hotel are different from any other realestate?We have a
4、lways been told thatthe price of an hotel is equal tothe price of five little greenhouses…….IT IS NOT TRUE!Why hotel are different from any other realestate?OFFICE = valued on m2basisRENTED ON A m2BASISGENERATES CASH‐FLOW ON A M2BASISRESIDENTIAL = valued on m2basisRENTED ON
5、 A m2BASISGENERATES CASH‐FLOW ON A M2BASISWhy hotel are different from any other realestate?Hotels are not rented on a m2basisas they do not generate cash‐flow on a m2basisWhat is the basis of hotel income generation?Yotel, London Gatwick (UK)Banfi Castle, Tuscany (Italy)W
6、Hotel, Barcelona (Spain)Why hotel are different from any other realestate?Hotels cash flow is generated by:RoomsFood&BeverageGym/Spa/HealthCentreMinorOperatingDepartmentWhat is avalue?OpenMarketValueFairValueLikelyFutureValueInvestmentValueMarketValueResidualLandValueCalcul
7、ationofWorth…MortgageLandingValue“What is avalue?“MarketValueistheestimatedamountforwhichapropertyshouldexchangeonthedateofvaluationbetweenawillingbuyerandawillingsellerinanarm’s-lengthtransactionafterpropermarketingwhereinthepartieshadeachactedknowledgeably,prudentlyandwit
