Investors
Over the years, hotels have become a recognized class of assets. Nevertheless, for many investors, the special features of hotels as a commercial operation on the one hand and real estate on the other hand are often difficult to follow. In this connection, HOTOUR provides support in the role of a moderator for the different interests of the investors and operators in answering the following questions:
Appraisal reports
Goal: evaluation of the sustainable rent and evaluation of the capitalized income value based on the sustainable cash flow of a hotel.
Services
- Leasehold value surveys for hotel projects and existing hotels are developed based on a site and market analysis as well as an evaluation of the hotel concept and a 10-year cash flow forecast.
- Valuation reports are executed by using the income approach to valuation (WertV) and by applying the internationally used cash flow method (DCF). If an asset value method is needed to validate the income approach to valuation, we develop it together with architects experienced in hotel topics from amongst the HOTOUR network.
Next steps:
Purchase and sale, bank financing
Quick Check
Based on the initial project idea, the Quick Check
already gives an indication to the project initiator if the hotel development is worth following up. Created as an internal decision basis, the hotel check quickly and informally reflects if a specific site is suitable for a hotel, which type of operation is suitable for the site according to the market needs and if appropriate operators are available.
Services:
- Brief site analysis on location or via desktop research
- A first brief appraisal of the market and crowding-out potential within the competition
Next step:
assuming a positive evaluation, the Quick Check is the basis for a pre-feasibility study
Hotel Check
The hotel check gives the client – hotelier, owner, financing institute or potential buyer – a first site determination. Created as an internal decision basis, the hotel check quickly and informally reflects if the hotel has weaknesses and if and how they are to be eliminated. This quick check is also highly suitable in advance of a planned purchase.
Services:
- Quick assessment of the operational figures, the hotel surroundings, its corporate design and marketing as well as the ability to sustainably fulfill the debt service,
- Assessment of the future sustainability of the hotel, of the operator,
- Assessment of the chances of re-leasing, sale or alternatively purchase.
Next steps – depending on the results of the analysis:
Creation of a business plan, coaching, controlling or in-depth analysis of the weaknesses, change of operator, sale / search for investors.
Assessment of Acquisition/ Hotel-Specific Due Diligence
Goal: basis for pricing and purchase decision, overview about opportunities and risks of the hotel real estate, the location and the operator.
Services:
- Assessment of the opportunities and risks of the hotel property and the site, the local hotel market, the type of operation and the operator´s contract,
- Evaluation of the alternative use in the sense of a different operator,
- Evaluation of a potential need for renovation,
- Assessment of the need for investments,
- Evaluation of potential in the operation and its environment.
Next step:
Purchase
Is it advisable to purchase this hotel?
Is the rent sustainable?
Is the lease and/or the cash flow forecasted or achieved so far for the hotel offered for sale achievable on a sustainable basis over the long term?
Lease band widths can be clarified in the context of a Quick Check. Precise lease calculations require a detailed analysis of the hotel project, whose suitability for a lease depends on the location, market, category and operating concept and is then determined in the context of Appraisal reports. If the capital debt serviceability of a hotel that is to be operated by the borrower itself or by a hotel company in the context of a management contract is to be evaluated, we determine – depending on the requirements of the bank providing finance – either the sustainable achievable cash flow or a calculated lease.
Lease reduction appropriate?
Is a reduction of the lease requested by the operator appropriate?
To answer this question, it is a prerequisite to conduct face-to-face negotiations with the operator. In order to conduct these talks, detailed appraisal reports are required upfront.
Is the price appropriate?
If the initial review produces a purchase price band width that seems plausible to the investor, then the question can be answered in detail in the course of Appraisal reports.
How to deal with change of operator?
What is to be observed at the end of the leasing term / with a pending change of operator respectively?
A change of lessee is a highly complex and thoroughly risky process that requires a lot of sensitivity on the part of the investor. An extension of the contract with the current lessee should therefore be given first priority without neglecting a timely approach to alternative operators. Following an initial review, HOTOUR offers a customized package of consulting services for this purpose.
