What's My Hotel Worth?
ARE YOU THINKING ABOUT SELLING YOUR HOTEL?
Having invested hundreds of hours studying the various approaches to value afforded hotels and attended conferences sponsored by outstanding Economic Trend/Hotel Appraisers in my view there is the hotel capitalization rate; the comparable to the hotels in the area that sold within the past 6-12 months; the discounted cash flow from a projected holding period; the IRR rate expected by the institutional Buyer. Location, location, location. If it is next to the stadium, a beautiful lake or popular mall there is added value.
Seller may want the bidding process. He'll hire one of the fully staffed and automated companies with multiple offices, who will send out the email blast to hundreds of companies on a list. Not all sellers and buyers like this method. It's an option. Sometimes it is a necessary option if the Seller-institution requires it. Buyer needs his own representation to dissect the deal room, prepare and strategise the potential offer.
The Seller's eyes are open, his agent who specializes in hotel real estate is experienced and knows the fundamentals of selling a hotel, and other consulting team members are on board, such as accountant, land use attorney or experienced developer, he should be looking forward to a successful sale at a reasonable price. There may be other factors than highest price that enter in.
Potential Buyer needs to familiarize himself with the property, the community, the city's economic development conditions. There may substantial improvements needed, perhaps an adaptive reuse--necessitating knowing the opportunities of tax incentives, the complications and opportunities of historic preservation. His agent representative can help him explore his options and bring an intelligent offer to the table.
Atkins Hotel Advisory provides consulting to Buyer or Seller and licensed real estate activities in California with Mahana Ventures, Inc., a California real estate broker, BRE license 01059644. And with The Beall Corporation in Hawaii.