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Allocation of value: Mom & Pop Non-Flagged Hotel/Motel

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doing a mom-pop non-flagged motel with bar, lounge and restaurant. jumbled records, in no standard format and food-beverage-room income NOT broken out.

I know this is a tough one without proper income in proper catagories. Yet, I'm going to plow though it!!

This is for ad valorem purposes, so I've got to remove the intangible personal property as well as FFE, etc.

I have AI monograph from Matonis from the AI Jounal (7/93),
and wondered if there are any other reference sources out there thanks to all!!

Paul Ness MAI

Jan 14, 2002
Professional Status
Certified General Appraiser
To comply with USPAP, you always need to allocate realty from non-realty assets when appraising a going-concern. I took a great AI seminar last year on separating tangible from intangible assets. It is a new seminar recently created because of all the confusion and lack of uniformity in use of terminology.

There are different methods of allocating, but one simple method that was mentioned, which I had seen in my review work and used myself, is completing the cost approach to estimate the contributory value of the realty, and the income approach is used to estimate the going-concern. Subtract the difference and that gives you the value of all personal property and intangibles in a lump sum. Intangibles include such things as name recognition (even if non-flagged), management, work force in place, a popular chef in a restaurant, copyrights, etc.

If a further breakdown of non-realty is needed, a personal property appraiser can be employed if you are not comfortable with FF&E. You can also isolate the value of the liquor license fairly easily. The state of PA recently changed their laws pertaining to issuance of liquor licenses, which you should check into. You need to find out what kind of license your property has, as this also plays into its valulation. The intangibles will then be the residual of all these deducted from the going-concern.
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