Hotel evaluation?

The hotel is a commercial real estate. For a long time, the practice and research of commercial property valuation have mainly focused on retail real estate, industrial workshops and commercial office buildings, and there is little research on hotel valuation methods. Therefore, no matter the appraisal institutions or investors, they don't have many choices when evaluating the hotel value, and they often use appraisal methods to develop other commercial properties. Hotel value consists of four parts: land, buildings, internal facilities and goodwill. As far as land and buildings are concerned, hotels can be valued according to the same principles as other commercial properties. However, some unique characteristics of the hotel industry, such as the single use of hotels, the need for special management experience, and the direct relationship between hotel value and its ability to generate net income in the future, make hotel valuation different from other commercial properties to a great extent. I. Traditional hotel value evaluation methods In general, the traditional hotel value evaluation methods mainly include the following: (1) Replacement cost method The replacement cost method assumes that the buyer is willing to pay no more than the cost of building a hotel with the same level of facilities, regardless of the price that the market is willing to pay or the value of the hotel's future net income. In the evaluation, the hotel construction cost is estimated at the current price, and then the depreciation amount is deducted according to the service life of the hotel, and the balance is the hotel value. The replacement cost method takes into account the entry barriers of specific markets, such as the strict restrictions on hotel construction by the government in specific areas, or the inability of the proposed hotel to obtain suitable land. Therefore, this method is very effective in evaluating the feasibility of the proposed development project. Due to the lack of historical data, other valuation methods can not be applied to newly opened hotels, which may be the most suitable valuation method. Different from other commercial properties, hotel depreciation consists of three parts: first, the physical depreciation of the hotel-the physical wear and tear of the property. Second, the hotel's function is outdated-compared with the newly-built hotel with the same function, the hotel's internal layout, style and design are unattractive, resulting in value loss. Third, the appearance of the hotel is outdated-the loss of value caused by external reasons. In other words, hotel depreciation should not only consider physical wear and tear, but also consider outdated functions and appearance. Because hotels are particularly prone to functional aging and appearance aging, these factors are often difficult to measure and adjust. Therefore, when evaluating hotels that have been in business for a long time, it is necessary to make a subjective and discontinuous depreciation estimation, which greatly reduces the reliability and effectiveness of the evaluation results. Another major disadvantage of this method is that it cannot reflect the investment concept based on future income streams. (II) Transaction amount comparison method The transaction amount comparison method assumes that hotel buyers are only willing to pay a price that does not exceed the recent transaction amount of similar hotels. This method only cares about the transaction price of similar hotels recently traded in the market, and does not consider the replacement cost of hotels and the value of future net income. The evaluation results truly reflect the current market situation and are easily accepted by both parties. In order to use this method effectively in practice, evaluation institutions need to obtain timely, verifiable and comparable transaction data. For properties such as retail real estate, it is relatively easy for valuation agencies to obtain sufficient transaction data. Different from these markets, hotel valuation has the following difficulties in data collection: first, there are not many buyers and sellers and transactions in the hotel market, and even fewer transactions can be used as valuation benchmarks. Secondly, a large number of hotel transaction contracts are not open, so it is difficult for evaluation agencies to obtain reliable transaction information. Moreover, the scale, quality, market positioning and facilities of different hotels are often quite different, so it is difficult to compare them directly. Finally, the hotel transaction data in different periods cannot be directly applied, and the hotel transaction price as a benchmark needs to be adjusted across periods. Generally speaking, the benchmark hotel transaction amount can only be used for comparison after large-scale adjustment. However, the two sides of the transaction often have different opinions on the adjustment range, and it takes a lot of consultation to reach an agreement.