Hotels and motels are often analyzed through the income approach, but their revenue streams and operating structures vary significantly. Motels have minimal “other income” with almost all of their income generated from the rooms themselves. Hotels often have conference rooms, ballrooms, restaurants, and bars that also generate income. The mixture of income related to hotels can make a huge difference in the valuation of your property. Typically, the appraisal district considers all income generated the same. We will meet with you to review the different ways to approach this.
Factors our consultants review
- Occupancy, average daily rate and revenue per available room
- Recent and planned soft-good or major renovations
- New competitive supply and changes in demand
- Deferred maintenance and capital needs
- Management fees, including appropriate expense when the property is self-managed
- The appropriate treatment of non-realty income and personal property
- Furniture, fixtures and equipment and related reserve allowances
- Franchise fees and required property-improvement plans
- Food, beverage and event revenue that may include business-related components
- Restaurant revenue considerations