Post on 24-Jun-2015
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Zen and the Art of Hotel Valuation
Presented by Tim Wilmath, MAI
Hillsborough County, Florida
Presented for the IAAO Annual Conference
August 25, 2014
There are many hotel types
Suite Hotels
Chain Hotels
For valuation purposes, hotels are either:
Under-Performing or Failing
Exceeding Expectations!!
Operating as Expected
When a hotel is
operating as expected,
it really doesn’t
present many valuation
challenges……..
When a hotel is failing
who’s fault is it?
When a hotel far exceeds
expectations, is that all real
estate or something else?
Why do some hotels succeed while others fail?
Why do some hotels fail?
A Market &
Competence
Google Trends reflects public interest
Without a market you have no customers.
Vanderbilt Hotel - Nashville
Vanderbilt Hotel - Nashville
The Vanderbilt gets a large share of it’s revenue from “group sales”
Nashville 12MMA demand by segment as a mix of total
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Group mix
Trans Mix
There has been a dramatic change in the mix of group sales versus transient in Nashville and the U.S. as a whole.
New and Planned Hotels in Nashville
In the face of adversity
the Vanderbilt
Hotel renovated
to stay relevant
Without competence you have failure.
Who is running this place?
A physical inspection will tell you a lot about management.
A hotel’s best friend or worst nightmare.
Pizza Party for improved TripAdvisor ranking.
Days Inn - Tampa
There is a reality TV show about turning around a failed hotel.
• A market • Competence
To really Excel, a hotel requires one more thing:
• Passion
Passion
Westin Diplomat Hotel - Ft. Lauderdale
Hotels ranked by franchise fee cost
Source: 2013 United States Hotel
Franchise Fee Guide
Hotels ranked by Sale Price Per Room
Source: Sale Prices and Brands –
Historical Trends in Hotel Sale Prices
HVS 4/14/2010
Source: New Option in Hotel Appraisals: Quantifying the Revenue Enhancement Value of Hotel Brands.
Appraisal Journal, Summer 2012. A. Scruggs Love, MAI, SRA, Bruce H. Walker, Douglas W. Sutton.
“Removing the brand name and reverting to an independent caused a drop in Revenue of about 35%”
Portofino Bay Hotel - Orlando
For Loews Hotel guests, the Express Pass is included in the room rate.
Hypothetical ADR: $300 Express Pass Cost: $89
Appropriate room rate for real estate tax assessment?
Nickelodeon Hotel - Orlando
Nickelodeon Hotel - Orlando
Nickelodeon Room Rate - $200 Physically similar hotels - $100 Which rate reflects Fee Simple Market Value?
Just like hotels…….. to succeed at work we need two main ingredients
• A market • Competence
Just like hotels…. without a market for our services we aren’t getting paid
Just like hotels…….. without competence at work we have failure
Skills that can’t earn money won’t get you very far.
Just like a hotel….. to Excel at our job requires:
• A market • Competence • Passion
What is your Highest and Best Use?
Sometimes we have to take risks to achieve passion
We often fear risk, because we fear failure.
Like losing money in the stock market
Or riding a motorcycle without a helmet
Take a Leap of Faith
Ernest Shackleton’s Imperial Trans-Antarctic Expedition
“Though no one can go back in time and make a new start, anyone can start
from now and make a brand new end“
Thank You!
Tim Wilmath, MAI Hillsborough County Property
Appraiser’s Office