Market Value of a Hotel – Market Value Appraisal
When buying or selling a hospitality property, the primary focus is on the market value (Verkehrswert) of the hotel property. The expert‑determined value serves as an indication of how much a hotel property is worth in normal business transactions, without considering unusual or personal circumstances. Determining this objective value requires the assessment of numerous criteria, making the valuation process highly complex. An experienced hotel valuation expert can support you in determining the market value of a hotel property, whether it is a hotel, hostel, boarding house, guesthouse, or a similar business.
Key Criteria for Determining the Market Value of Hotel Properties
Relevant factors include not only the location and physical condition of the property but also the competitive environment, the hotel’s concept, its current market positioning, and its future prospects. To derive concrete market values from these and many other criteria, experts apply various valuation methods used to prepare market value appraisal reports.
Market Value Determination According to ImmoWertV and DCF Methods
Beyond purchase or sale situations, determining the current market value is also required for asset assessments, succession planning, or property financing. In Germany, the Real Estate Valuation Ordinance (ImmoWertV) plays a central role as the legal basis for valuation. Increasingly, international standards such as the discounted cash‑flow (DCF) method are also applied. The following provides a brief overview of these methods.
Valuation Methods According to ImmoWertV in conjunction with §194 BauGB
Comparable Sales Method (Vergleichswertverfahren): The market value is derived by comparing the property with a sufficient number of similar hotel properties whose characteristics allow conclusions about the subject property.
Income Approach (Ertragswertverfahren): This method considers both the land value and the income generated by the building. The net operating income, land value, and its imputed interest are used to determine the value.
Cost Approach (Sachwertverfahren): The market value is based on the cost required to construct a comparable hotel today. Depreciation and the land value, including a market adjustment factor, are taken into account.
DCF Method – Discounted Cash‑Flow Valuation for Hotel Properties
International investment firms, publicly listed companies, and banks increasingly require valuation reports that reflect global standards. For this purpose, the discounted cash‑flow method is applied. Under this internationally recognised approach, the market value of a hotel is derived from projected future cash flows generated by the business. These cash flows are based on key figures from strategic business planning.
The decisive factor for the value of a hotel property is therefore its ability to generate future revenues and cash flows. The quantity of existing assets or their replacement cost is secondary; what matters is the hotel’s capacity to generate future earnings.
Practical Valuation Models for Hotel Properties
Multiplier Methods
These methods use ratios between annual net revenue or EBITDA and annual rent, lease payments, or debt service.
(Values as provided in the original text are retained.)
Comparable Sales Method
Due to differences in location, quality, functionality, and condition, sales data for hotels provide only rough benchmarks. These are typically expressed as sales price per available room.
(Values as provided in the original text are retained.)
RevPAR / Yield Method
Market price per room = RevPAR / yield in € × (between 1,800 and 2,200)
The “Coke‑Can Multiplier”
Market value = price of a can of soft drink from the minibar or vending machine × number of rooms × €100,000 (for mid‑scale hotels).
Why a Market Value Appraisal Matters
The reasons for commissioning a market value appraisal vary widely, but determining the actual market value of a hotel is always complex. Our experienced hotel valuation experts maintain a clear overview and identify the most appropriate valuation method for your specific purpose.
Do You Have Questions About Determining the Market Value of a Hotel?
With our specialised expertise in hotel consulting, many years of experience in preparing valuation reports and analyses, and in‑depth knowledge of the hotel market, we are able to determine the market value of your owner‑operated or leased hotel property accurately. We would be pleased to demonstrate the competence and capabilities of our hotel valuation specialists. Contact us at +49 176 4884 62 90 or via our contact form.
If you are planning a hotel project, we can also support you with a feasibility study to identify success factors and potential risks.
Stichwort: Wertermittlung von Hotelimmobilien, Wertermittlung, § 194 BauG, DCF-Verfahren, Hotelimmobilie, Hotelgutachter, Hotelberater, Hotelconsulting, Hotel-consulting