Valuations of hotel properties are primarily required in the event when company owners may be willing to approach a bank for a loan and offering the hotel as collateral. Hotel investors when looking to invest in new hotel properties in Sydney, they also need proper valuation reports from the vendor. If the hotel owners want to sell their hotel, then they need an expert valuation report to decide the offer price of the leisure property in Sydney. When hotel real estate companies follow the strategy to merge with another hospitality company, they must conclude the price of their capital assets.
Hotel Sydney property valuer are unlike any other office or residential property valuation since hotels specifically don’t generate income as other properties i.e. where office or residential properties are rented on m2 basis, the hotel properties don’t generate cash flow on the same me basis.Hotels specifically are subject to multiple income generation sources viz. rooms, food and beverage, operating department fee revenues, gym, spa and health center services revenues etc.
According to the IVES, the property with trading potential, such as hotels, fuel stations, restaurants, or the like, the Market Value of which may include assets apart from land and buildings alone. These properties are commonly sold in the market as operating assets and with regard to their trading potential.For undertaking hotel industry valuations it is necessary to have the historical data of the local market and property i.e. the profit and loss statements.
Whereas the property valuer in Sydney needs to also know when performing the valuation of a hotel property the trading capacity dynamics of the concerned market i.e. the demand and supply scenario. They should also understand the hotel property market penetration projections, comprehending the financial facets of the current LAV, equity yield and investment risk.
Apart from these considerations, a trading hotel is also a brand in the relevant market of operation; therefore there is also an intangible but worthy value that is to be tapped. A valuation of hotel property also takes worth of such elusive elements into consideration.The value of a hotel is built up of four major apparatuses viz. land, improvements, personal property, and the running business. The land generates revenues depending on its location attributes.
When doing property valuation for hotels and motels for real property assessment reasons, when only the market value of the land and improvements is the subject, the valuer must also cater to the allocation of value between these four major components. This should be done such that it mirrors the actual hotel operating structures, customs, and economics.