VALUATION OF…
Hotels
Hotels and hospitality properties, valued on trading performance, lease/operating covenant, and location within tourism or business nodes.
Content status: Methodology and evidence log — Sources, Caselaw and Market Information are added incrementally.
Methodology
Hotels are operational trading properties, valued primarily using the Profits Method or a Discounted Cash Flow of trading income, applied to a stabilised or market-level EBITDA rather than a passing rental, since value is driven by trading performance rather than a lease.
The Big Five framework is adapted for a trading property: the Income Generating Units are rooms, food and beverage, conferencing and other trading departments; ‘contract versus market’ income is reinterpreted as actual trading performance (RevPAR, occupancy, ADR) against stabilised market-level potential for the grade and location; a vacancy allowance is expressed instead as an occupancy assumption; and normalised operating expenditure is modelled through to a GOP margin before the discount rate — reflecting brand covenant, management agreement and operational risk — is applied.
A Direct Comparison cross-check, expressed as a rate per key (per room) against sales of comparable hotels by grade and location, is used to test the primary income-based valuation.
Caselaw
Case law, regulatory rulings and expert-determination disputes relevant to valuing this asset class. Each entry cites its source and summarises the practice implication for valuers — this is not investment, financial, or legal advice.
The Evidence Log is for VDH Members
The Evidence Log for Hotels — sourced sales, disposals and rentals with Valuer’s Lens commentary — is included in VDH Membership: from R125/month for SACPVP candidates and students, R399/month standard. All prices include VAT.
The methodology and case law on this page remain free to read.