Useful further reading (online)

1. JLL Hotel Investment Outlook 2017

   www.jll.com/Documents/Hospitality/JLL-HIO-2017.pdf

2. JLL Hotel Investor Sentiment Survey, January 2017

   www.jll.com/Documents/Hospitality/JLL_Hotel-Investor-Sentiment-Survey_January2017.pdf

3. Crocker H. Liu and John B. Corgel (2017) ‘Do Property Characteristics or Cash Flow Drive Hotel Real Estate Value? The Answer Is Yes’

   http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1244&context=chrpubs

4. Stephen Rushmore (2001) Hotel Investments Handbook 2002

   www.hvs.com/emails/rushletter/Hotel%20Investments%20Handbook/Hotel%20Investments%20Handbook.pdf

5. Stephen Rushmore (1992) ‘Seven Current Hotel Valuation Techniques’

   www.hvs.com/article/362-Seven-Current-Hotel-Valuation-Techniques

6. Royal Institute of Chartered Surveyors (RICS) (2012) Guidance Note: Capital and Rental Valuation of Hotels in the UK, 2nd Ed.

   www.rics.org/uk/knowledge/professional-guidance/information-papers/capital-and-rental-valuation-of-hotels-in-the-uk-2nd-edition/

7. HVS European Hotel Valuation Index 2017

   www.hvs.com/article/7941/2017-european-hotel-valuation-index

8. Tony Sevelka (2004) Where the Overall Cap Rate Meets the Discount rate, The Appraisal Journal, 135–146

   www.intval.com/pdfs/WhereCapMeetsDiscount.pdf

9. Lelacqua, L. and Smith, T. (2012) Hotel Contracts – To Lease or Not to Lease? London: HVS

   www.hospitalitynet.org/file/152004941.pdf

Useful slide presentations

1. https://quizlet.com/148683272/chapter-8-present-value-mathematics-for-real-estate-flash-cards/
2. (Chapter 4): www.wiley.com//legacy/wileychi/wyatt/slides.html

Useful videos

Other

Jan A. deRoos and Stephen Rushmore: links to free Hotel Valuation Software 2.5 Tool + Case Studies, Cornell Center for Hospitality Research

1. Link 1:

   http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1013&context=chrtools

2. Link 2:

   http://scholarship.sha.cornell.edu/chrtools/15/

Further discussion questions

Note: a worked answer sheet is supplied with Question 1

1. You have just joined an appraisal firm and are tasked to value a 250-room upscale hotel based on the EBITDA forecast and valuation parameters shown below. Using the DCF approach, what is the value of your client’s investment?

   EBITDA Forecast
   Y1	4,800,000
   Y2	5,040,000
   Y3 Stabilized	5,266,800
   Assumptions:
   1: EBITDA grows with Inflation from Y3 onward
   2: Inflation Rate	2.0%
   3: Discount Rate	9.0%
   4: Terminal Cap Rate	7.0%
   5: Transaction Costs	1.5%

   Answer
   Answer: 71.4 million or approximately 286,000 per room.

   Download Valuation Exercise Answer
2. You are advising a private equity firm on its first hotel acquisition. Your client has risk appetite and is looking for high returns. Which hotel products, markets and operating models should your client explore? Why?
3. You have been asked to perform a lease rent valuation for a hotel owned by a major insurance group. Discuss how your client’s expected income stream and valuation parameters would differ compared to the hotel’s value if it was held under a management agreement.