Hospitality Real Estate Appraisals
Hotels are unique commercial properties highly volatile to economic changes.
Each of Montaña Verde’s appraisal reports are prepared to tailor to our client’s specific needs and range in scope from a restricte to a complete appraisal presented in a self-contained report format for both the real estate and business components of an existing or proposed hospitality facility.
Montaña Verde accounts for current market conditions and prepares comprehensive analysis of past, present and anticipated market conditions to determine the competitive supply of hotel rooms and the current and projected levels of lodging demand. Performance projections are completed based on assessments of the subject hospitality property’s competitive advantages and disadvantages within its market and then valued based on income approach, sales comparison approach and cost approach, if applicable.
Montaña Verde accounts for current market conditions and prepares comprehensive analysis of past, present and anticipated market conditions to determine the competitive supply of hotel rooms and the current and projected levels of lodging demand. Performance projections are completed based on assessments of the subject hospitality property’s competitive advantages and disadvantages within its market and then valued based on income approach, sales comparison approach and cost approach, if applicable.
Income Approach
Montaña Verde determines the hotel’s income approach based on the financial projections that are made based on a detailed line-item analysis of all sources of revenue and expenses. Conversions of income to value are accomplished by direct or yield capitalization through the use of market-based debt and equity rates of return gathered from Montaña Verde’s internal database, industry publications and interviews with market investors, lenders, operators and tourism officials.
Sales Comparison Approach
Montaña Verde determines the value by examining the sales price of similar properties and hotels that have transferred within the relevant past. We review contracts of sale and listings of properties for sale based on our extensive database of properties throughout Mexico’s tourist corridors. We examine the subject property’s market area, but also expand our comparison to properties with similar properties and hotels in the state, region, country and competitive markets. Our proprietary database includes lodging property sales supplemented by information provided by real estates sales agencies, operators, hotel companies, owner and investors.
Cost Approach
Montaña Verde calculates the land valuation, costs of replacing or reproducing property improvements and the amount of lost value related to deterioration and obsolescence in order to establish the replacement cost of the subject property at current costs. Industry accepted cost services are used as references in order to determine hotel construction costs. Montaña Verde supplements these references by interviews with developers, construction companies and operators in the property’s market area. Montaña Verde studies the actual development costs for similar projects.