hotel valuation
Hospitality Financial Leadership: Putting a Dollar Value on a Hotel
DAVID LUND | May 20, 2024
By David Lund Determining the current selling or asking price for a hotel is a bit tricky. Compared to estimating the present value of a house it’s more like a detailed math exercise rather than a google search on Redfin. That’s what this piece is all about, how you can estimate the value, AKA sales price. Commercial real estate firms specializing in hotel valuations are what your bank is going to require that you use if you’re asking them for financing to buy a hotel. That makes sense because the bank will want to protect their interest. If you own a hotel and want to sell it you can go that route as well but it’s not like two ...
Paramount Lodging Advisors Welcomes Hunter Johnson to Team
Paramount Lodging Advisors | January 10, 2023
CHICAGO, IL – The Paramount Lodging Advisors (PLA) team is thrilled to welcome Hunter Johnson as Senior Associate. Hunter’s office will be based in Southwest Colorado with a focus on Colorado and Utah. Hunter has covered the industry with experience in hotel purchasing, financing, and brokerage. In the last 24 months, he has transacted over $87MM from small independent hotels to IHG and Hilton assets. “I am honored and grateful to be part of such an entrepreneurial, honorable, and hardworking team,” stated Johnson. If you would like to reach out to Hunter, he can be contacted at hunter@paramountlodging.com or 970.880.0621....
Valuing Hotels Amid Rising Capital Market Costs: A Case Study
Anne R. Lloyd-Jones | November 30, 2022
By Anne R. Lloyd-Jones The capital markets have experienced a signficant shift in the past six months, and financing for hotel projects is both less available and more expensive than it was in the first half of 2022. Driven by successive increases in the federal funds rate, interest rates have risen and are now typically in the 6% to 8% range, depending on the asset and market. At the same time, concerns related to a potential recession and the impact of inflation on operating costs and consumer spending have induced a layer of caution about the near-term outlook for the industry. As a result, loan-to-value ratios have declined and amortiz...
A Review of Equity Yields and Discount Rates in a Post-COVID Environment
Katy Black | October 13, 2022
By Katy Black Equity yields and discount rates remain at or below pre-COVID levels; however, rising debt costs will result in changing investor return expectations. HVS continually tracks the discount rates and equity yields for the assets on which we consult. In the case of hotels that were sold near the date of our valuation, we were able to derive the equity yield rate and unlevered discount rate by inserting the ten-year projection, total investment (purchase price and estimated capital expenditure and/or PIP), and debt assumptions into a valuation model and solving for the equity yield. Equity yield is the rate of return that an...
HVS Monday Musings: Income Capitalization Approach – The Gold Standard for Valuing Hotels
Anand Rai | August 29, 2022
By Anand Rai According to a recent GlobalData report, 573 deals (including mergers & acquisitions, private equity, and venture financing) were announced in the global travel and tourism (T&T) industry in the first half of 2022, reflecting a 3.1% increase over the same period last year. However, before these deals are concluded, the asset needs to be valued. So, how do we determine a hotel's market value and what exactly is valued under the category of hotels? The main valuation techniques are briefly covered in this article. The hotel’s market value takes into account the value of all of its different components, including th...
Hotel Transactions Up on 2020 Levels With Single Asset Deals Reaching Record Average Room Rates, Reveals HVS Report
HVS | May 3, 2022
Strong recovery for European hotel transactions with deals worth €16.4bn Year sees record average sale price per hotel room for single assets at €260,000 London tops hotel transaction top 5 with Barcelona, Stockholm, Berlin and Madrid 03 May 2022, London: Last year was one of strong recovery for European hotel transactions with €16.4bn-worth of deals, twice that of 2020, according to the latest European Hotel Transactions report from global hotel consultancy HVS and its brokerage and investment services division HVS Hodges Ward Elliott. The report reveals that 322 European hotel transactions took place during 2021 ...
HVS Market Pulse: Philadelphia, Pennsylvania, Lodging Market
HVS | May 2, 2022
The COVID-19 pandemic has had a severe impact on the Philadelphia lodging market. While the area regained a substantial amount of tourism in 2021, Philadelphia’s lodging market has remained depressed for nearly two years given the limited amount of commercial and group demand. Demand was healthy in the years prior to the pandemic, with Philadelphia hotels registering occupancy levels in the high 60s to low 70s from 2011 through 2019. Occupied room nights were generated by a mixture of tourists visiting sites and museums or attending sporting events, group and international travelers attending events at the Pennsylvania Convention Center...
Fitch Maintains 14 US CMBS Single Borrower Hotel Transactions on Negative Watch Due to Pandemic
Fitch Ratings | February 22, 2021
Fitch Ratings - Chicago - 22 Feb 2021: Fitch Ratings has maintained 79 classes from 14 U.S. CMBS single borrower transactions on Rating Watch Negative (RWN). Fitch originally placed the classes on RWN on March 19, 2020. KEY RATING DRIVERS The 14 transactions represent the entire portfolio of Fitch-rated single borrower hotel transactions. The transactions were issued in 2019 (four) and 2018 (10). The majority are secured by an individual hotel property; the underlying properties are located in Florida (six deals), Hawaii (four), Arizona (two) and California (one). There is one transaction secured by a portfolio of La Quinta hotels. Three tr...
