Valbridge appraises both existing and proposed hotels throughout the region! Because we're knowledgeable on this property type, we decided to pick the brain of our own Brock Heyde, MAI about what to take into consideration when appraising in the hospitality industry! Hotels are an Operating Business: Many hotels often conduct other businesses such as restaurants/bars, banquet/meeting room rentals, and business services. Each business component requires its own income and expense analysis.
Hotels are Labor Intensive: In order to accomplish the goals of (1) executing 24-hour leases and (2) operating other related businesses, hotels are very labor intensive. Labor categories often include a general manager, front desk staff, housekeeping, maintenance, food and beverage staff, and sales and marketing staff. Depending on the size, location, and chain segment, additional labor categories can include security, human resources, accounting, and uniformed staff (bell-staff, valet, and concierge). Hotels are Capital Intensive: The excess wear and tear on hotel real estate and FF&E, due to the public nature of the facilities, requires annual expenditures for property renovation and improvements (that other real estate types do not require). There is a Formula for Measuring ADR: ADR (Average Daily Rate) is a measurement of the average rate paid for rooms sold. This is calculated by dividing the room revenue by rooms sold. Hotels are Typically "Branded" with a Chain Affiliation: In essence, the chain affiliation partially replaces the real estate broker as the leasing agent. Hotels Can Be Grouped Based on the Actual Average Room Rate: This method groups hotels in what is called "Chain Scales", with segments such as "Luxury", "Upper Upscale", "Upscale", "Upper Midscale", "Midscale", and "Economy". Independent hotels, regardless of their average room rates, are included as a separate chain-scale category called "Independent". We hope this has been helpful! Click here to contact our expert and contributor Brock Heyde, MAI!
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Open the newspaper or turn on the local news and you're likely to catch a story about the new KCI single terminal. We may be well-informed when it comes to this project, but what exactly does a new airport mean for our city? More International Flights: Landing its first nonstop transatlantic flight service this year was a huge win for KCI! With a new terminal, we can only expect our flight options to increase because we will be able to accommodate these non-stop flights. Not only this, but increased amenities within the terminal will better welcome passengers who may be only laying over.
Job Creation: A billion-dollar project like this is more than likely to create many jobs. Right now, the goal is to increase minority and union hiring for the extensive construction work. Bigger Flights: The proposed increased gate size will mean that more people will be able to board the airplanes. Not only will this lead to bigger flights, but there will be increased seating areas and more amenities like charging stations available to those waiting. Better Parking: No more uncovered parking! The new single terminal will offer tons of garage space and covered spots. This is a true necessity for a city with such unpredictable weather. ...And most importantly... MORE/BETTER RESTROOMS: Anyone who has ever tried to use the restroom once they've entered their gate at KCI knows that there's always an impossibly long line and maybe only two or three stalls inside. Bigger gates = more restrooms with better facilities. How do you think the new KCI will affect our city? Let us know in the comments below! |
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