Hotel valuation
Forecast of Revenue and Expense
Besides Supply and Demand analysis which provides a general concept of measuring performance in the market share, revenues and expenses forecast gives the investors the overview of the future cash flow which reflects the return as the crucial metrics of the investment, helping investor to make a good decision.
According to the proposal plan, the proposed hotel located in 22nd street will have following facilities: 238 hotel rooms, 53 off-street parking spaces in a valet-operated below-grade garage, a fitness center, a restaurant with an entrance on M street, an outdoor terrace and a roof-top pool. Based on the demand and supply analysis project, the proposed Hilton Garden Inn will open in the January, 2014 with 238 rooms opening 365 days, occupancy level of 75% and an average daily room rate of $168.
To make a prediction of an existing hotel, appraiser need to look up demand and supply of local market and past financial statement in order to forecast future expenses and revenues accurately. In this case, because the Hilton Garden Inn is a proposed hotel so that more fieldwork are required for the precise prediction. To estimate expenses and revenues of a proposed hotel, the comparison between the proposed hotel and comparable hotels is very crucial. Additionally, the national averages which represent average operating performance and typical management ability may give investor a useful reference. The forecast of revenue and expense begins by converting the occupancy and average rate projections into an estimate of rooms revenue. Analyzing data collected in the market and industry statistics, the appraiser can establish a forecast model of other revenue category such as food, beverage, telephone, and other income as well as normal hotel operating expenses. Before projecting individual items of hotel revenue and expense, the fixed and variable component approach is widely used, setting up a constant portion of expense or
Besides Supply and Demand analysis which provides a general concept of measuring performance in the market share, revenues and expenses forecast gives the investors the overview of the future cash flow which reflects the return as the crucial metrics of the investment, helping investor to make a good decision.
According to the proposal plan, the proposed hotel located in 22nd street will have following facilities: 238 hotel rooms, 53 off-street parking spaces in a valet-operated below-grade garage, a fitness center, a restaurant with an entrance on M street, an outdoor terrace and a roof-top pool. Based on the demand and supply analysis project, the proposed Hilton Garden Inn will open in the January, 2014 with 238 rooms opening 365 days, occupancy level of 75% and an average daily room rate of $168.
To make a prediction of an existing hotel, appraiser need to look up demand and supply of local market and past financial statement in order to forecast future expenses and revenues accurately. In this case, because the Hilton Garden Inn is a proposed hotel so that more fieldwork are required for the precise prediction. To estimate expenses and revenues of a proposed hotel, the comparison between the proposed hotel and comparable hotels is very crucial. Additionally, the national averages which represent average operating performance and typical management ability may give investor a useful reference. The forecast of revenue and expense begins by converting the occupancy and average rate projections into an estimate of rooms revenue. Analyzing data collected in the market and industry statistics, the appraiser can establish a forecast model of other revenue category such as food, beverage, telephone, and other income as well as normal hotel operating expenses. Before projecting individual items of hotel revenue and expense, the fixed and variable component approach is widely used, setting up a constant portion of expense or