Financing Institutes
HOTOUR has a long-standing history in advising financing institutes. The most frequently asked questions are the following:
Appraisal reports
Objective: determination of the sustainable rent and calculation of the capitalized income value based on the sustainable cash flow of a hotel.
Services
- Leasehold value reports for hotel projects and existing hotels are being developed on the basis of a location and market analysis, an evaluation of the hotel concept and a 10-year cash flow forecast
- Valuation reports are being carried out according to the income approach to valuation (WertV) and by applying the internationally used discounted cash flow method (DCF). If an asset value method is needed to validate the income approach to valuation, it is being developed together with experienced architects from our extensive network
Next steps:
Purchase and sale, bank financing
Business Plan analysis
This tool provides valuable feedback to hotel owners on the quality and soundness of the self-produced business plan. This service also benefits investors and financial institutes that try to validate the business plan of operators and other borrowers. Particularly, we focus on the feasibility of financial forecasts and the ability to cover lease or debt service obligations in the long-run.
Services:
- Thorough analysis of the operational figures and financial forecasts
- Assessment of forecastsbased on the market environment
- Assessment of cost forecasts based on the operating concept
- Verification of the ability to cover debt service obligations
Next steps – depending on the results of the analysis:
Coaching, Controlling/Monitoring
Quick Check
Based on the initial project idea, the Quick Check
gives a first indication whether it is worthwhile pursuing the hotel development. As a basis for internal decision making, the hotel check quickly and informally reflects if a specific site is suitable for a hotel, what type of operation is suitable for the site according to the market needs and if appropriate operators are available.
Services:
- Brief site analysis through an on-site inspection or via desktop research
- A first brief evaluation of the market and crowding-out potential, considering the competitive landscape
Next step:
In case of a positive outcome, the Quick Check forms the basis for a pre-feasibility study
Restructuring analysis
Our restructuring analysis are mainly based on the IDW standards (German Institute of accountants) for restructuring concepts, adjusted to the specific needs of the hotel industry.
Our aim is to assess the current status of the business in order to develop a sustainable long-term positioning.
Services:
- Assessment of the external environment conditions of the business
- Detection of operational difficulties that led to the current economic situation
- Evaluation of future potential
- Assessment of required investments and necessary funding
Next steps:
Bank financing, coaching
Is the lease sustainable?
What is the amount of sustainably achievable lease (cash flow – in case of management contracts) for a particular hotel?
The scope of a lease can be clarified by applying a Quick Check. Precise lease calculations require a thorough and more detailed analysis of the hotel project. The achievable lease depends on the location, market, category and operating concept of the hotel and can be determined through an Appraisal reports of the leasehold value. If the debt service coverage of a hotel is subject to evaluation, we determine – depending on the requirements of the financing bank – either the sustainably achievable cash flow (management contract) or lease.
Market value of the hotel?
What is the market value of a particular hotel?
Appraisal reports are prepared on the basis of a profitability calculation and performed either by applying the earnings value method (according to german WertV) or the internationally used Discounted Cash Flow (DCF) method.
Restructuring of the opreation?
Is it worth restructuring the hotel operation?
This question can be answered thoroughly within a Restructuring analysis (according to German IdW Standard and adapted to the needs of the hotel industry). An initial feedback can also be given through a Quick Check.
Concept plausible?
Does the operational concept meet the market requirements?
In order to check whether the product positioning, real estate, marketing and operating concept, personnel planning and efficiency of an existing hotel or project are feasible, we review the operator’s or borrower's business plan and verify its plausibility (Analysis of Business Plan). If no business plan should be available it is recommended to use a Appraisal reports of the leasehold value.
Alternative use for porperty?
Is the hotel property suitable for a third-party use - meaning by an alternative operator?
Depending on the objective and required level of detail this question can be answered either through a Quick Check, an Appraisal reports based on the leasehold value or an Analysis of Business Plan .
