Florida Hotel Valuation & Pricing Strategy

What Sets a Hotel's Price

Every hotel buyer and every hospitality lender reads the same figures in the same order. The valuation starts there and then adjusts for what the numbers do not show.

• Occupancy: The share of available room nights sold, by month and by year, against the market and the competitive set.
• Average daily rate (ADR): Room revenue divided by rooms sold. Rate is where a boutique or oceanfront hotel earns its multiple.
• RevPAR: Revenue per available room: occupancy times ADR, the single figure most buyers compare first.
• Net operating income: Revenue less operating expenses, a market management fee and a reserve for furniture, fixtures and equipment, usually four percent of revenue.
• Price per key: The asking or sale price divided by the number of rooms, the shorthand every hotel buyer and lender uses to compare properties.
• Brand and franchise terms: The flag, the remaining term, the fees, the property improvement plan a transfer triggers, and whether the franchisor will approve the buyer.
• Property condition and capital needs: Roof, mechanicals, elevators, pool, seawall where there is one, and the last renovation; coastal insurance and flood cost now move hotel values as much as rate does.
• Land and alternative use: A motel on a corner lot or an oceanfront parcel can be worth more as land or as a redevelopment than as a going concern, and the valuation says so when it is.

Three Ways a Hotel Is Valued

Income first: net operating income capitalised at the rate buyers are paying for comparable Florida hotels, cross-checked as a multiple of room revenue. Then the sales comparison: what similar hotels have sold for per key, adjusted for rate, condition and brand. Then the real estate on its own: what the land and building are worth to a redeveloper, which for an older motel on a good lot can be the highest of the three.

What the Valuation Needs From You

The more complete the package, the narrower the range.

• Trailing twelve months and three years of profit and loss
• STR report or the occupancy and ADR history by month
• Franchise agreement, remaining term and any outstanding PIP
• Rent roll if any space is leased, and any ground lease
• Capital expenditures for the last five years and the known deferred items
• Insurance declarations and the flood zone
• Management agreement, if the hotel is third-party managed
• Property tax bill and any pending assessment appeal

Pricing Strategy, Not Just a Number

The valuation ends with a recommendation: the asking price, the buyer it is aimed at, whether to sell the operation with the real estate or lease the real estate back, whether to complete the PIP before the sale or price it in, and how long the sale is likely to take. A hotel priced for the wrong buyer sits; a hotel priced for the right one gets an offer.

What Happens After the Valuation

If the owner decides to sell, the same broker runs the sale from the valuation forward.

• Confidential consultation: A conversation about the property, the operation, the brand and what you want from the sale, before anything is written down.
• Preliminary pricing review: The trailing twelve months, the STR or occupancy history, the rate history and the balance sheet read against what comparable hotels are asking and what hotel buyers are paying per key.
• Documentation: The package a serious buyer and their lender will ask for: three years of financials, the franchise agreement and any PIP, the property condition and capital history, the insurance and flood position, the staff roster and the management arrangement.
• Underwriting: Net operating income after a market management fee and an FF&E reserve, so the price the hotel is offered at survives a buyer's lender.
• Buyer identification: Owner-operators, regional hotel groups, private investors and funds matched to the property's size, brand position and price, approached one at a time.
• Confidential marketing: A blind profile with the key numbers and no address; the full package only under a signed NDA and proof of funds.
• Offers and negotiation: Offers compared on price, financing, deposit, due-diligence period, franchisor approval and the PIP, then negotiated in writing.
• Due diligence and closing: Inspections, title, franchisor approval, liquor and business licences, the STR audit, the lender's appraisal and the closing statement, managed to the date on the contract.

Request a Confidential Hotel Valuation

Tell us about the property: where it is, how many rooms (under 20 rooms to 200 rooms or more), whether it is independent hotel or motel, branded or franchised hotel, boutique hotel or inn, your role, and when you are considering selling (as soon as possible, within 6 months, 6 to 12 months, exploring options). The financials come later, under NDA, in the valuation conversation with the broker of record. A hotel inquiry is confidential. Staff, guests, franchisors and lenders hear about a sale when you decide they should, not from a listing.

Broker of record direct: (786) 914-1017 · sales@breakthrurealty.com

Questions Hotel Owners Ask

How much is my hotel worth?

It depends on net operating income, RevPAR against the competitive set, the brand and its PIP, the condition of the building and what the land would be worth on its own. A confidential valuation reads all of them and gives you a range and a reasoned asking price. No figure is shown on this page; the broker calls with it.

What is price per key?

The price divided by the number of rooms. It is how hotel buyers and lenders compare properties of different sizes, and the figure a valuation checks its income approach against.

Is a hotel valuation an appraisal?

No. A broker's valuation is an opinion of market value for pricing and selling, supported by comparable listings and sales. A lender will order its own appraisal from a licensed appraiser during the buyer's financing.

Should I complete the PIP before selling a flagged hotel?

Sometimes. A completed PIP widens the buyer pool and lifts the price, but it ties up capital and time. The valuation quotes the PIP early and shows the price with it done and with it priced in, so the owner chooses.

Does the valuation cost anything?

No. It is confidential and without obligation, and the conversation is with the broker of record.

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• Tyson E. Sam, Founder and Broker of Record