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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

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