Help on Small Town Hotel

[Wayne Tomlinson]

Do you think that he might be able to come up to "his prime" during the hearing before the displinary board?

He could get a good nights sleep, he might even then, if he has time actually read the report that he put his stamp on.

You got to be kidding!!

Why don't you ask the buyer to ask the owner to provide with you his reported income and expenses for the past three or four years.

Then you can provide them a report relying entirely on the income approach. Ask them to tell the seller that since they are interested in the income stream the property provides, then that is what they are actually intereste in doing.

The response should be interesting. I had a restaurant owner give me the same type of stuff, I wrote the appraisal based primarily on the auction value of the stuff. The sale did not happen. But I got paid. Directly by the potential buyer at the inspection.

After that, let some one else have the assignment.

Wayne Tomlinson

 

[Michigan CG]

For his stamp only. He is really no help, but a former mentor and good friend who are past their appraisal prime.

I really hope you know how to appraise a motel, or hopefully your "tired" old mentor does.

 

[cotterboy]

I realize what could happen if it goes bad. My point is i am trying to do a through report to make sure nothing does. I don't need to be warned. Maybe i should clarify that i have a degree in financial managment, am a CFA, and have a pretty good working knowledge if financial statements. I worked in a lending insitution for years and have been on my own as a n appraiser going on 6 years. The property is over two acre of Lakeview foratage and the home is in there as well. The value is more of an afterthought by the lender in my opinion. Oh, I am the highest rated appraiser in their system with well over 1,000 tranactions with no issues. i have explained the situation to buyers and the bank. The buyers actually made the statement that they will just pay cash if the bank cannot lend them the money, and they are mainly wanting to get established witha local bank. I have a pretty good idea of what i am doing, but just wanting to get some industry specific tips and tricks such as the seminar i am taking the next few days.

 

[Amy Grande]

I can tell you that hotels are absolutely NOT my favorite assignments. I am wondering if perhaps, given the lack of guidance you are receiving, a HOST report would be a very valuable tool.

At that point you can analyze your RevPar, occupancy in comparison to industry trends, and determine an Average Daily Rate. You may also find the STAR report helpful, which REALLY should be available to you via the current owner. (if the STAR report is a regional thing, I apologize in advance).

What ends up being the area of contention is the departmental and non-departmental expenses, and the breakdown that goes into each. There is a set of definitions in the back of the HOST report and you have to break it down the way HOST does it so you can compare apples to apples. The problem generally ends up being that the owners do not follow the HOST report so you need a very detailed expense history (ideally of course, and it doesn't sound like you will be able to get that).

 

[PL1957]

Now, I don't do a lot of hotels/motels, so I might be wrong, but I always thought STR and HOST reports primarily dealt with larger properties, whether they were chain, franchise or independent. Would they really be useful in the analysis of a 20-unit motel? Wouldn't it be kind of like using Korpacz as a cap rate indication for a 4-unit apartment building?

 

[Michigan CG]

Now, I don't do a lot of hotels/motels, so I might be wrong, but I always thought STR and HOST reports primarily dealt with larger properties, whether they were chain, franchise or independent. Would they really be useful in the analysis of a 20-unit motel? Wouldn't it be kind of like using Korpacz as a cap rate indication for a 4-unit apartment building?

I have never seen a HOST report. I am pretty sure I have seen STAR reports on properties with as little as 30 units. From what I have heard (for what that is worth) they will take most properties, after all they make money on them.

 

[Scott Lanz]

I have a STAR with a 34 unit property reporting in my market.
HOST is a decent support publication as is PKF.

I built a spreadsheet that includes a column for the standard accounting practices, HOST and PKF categories next to the owner's detailed income/expenses statements. Then, a second page using =sumif commands takes all of the income and expenses and places them into the correct categories.