4-star hotel near Disneyland Paris

Office: Horwath HTL France

Project Overview: A private investor owned a 4-star hotel near Disneyland Paris which had been managed under an international brand. Horwath HTL France was commissioned to perform an asset valuation of the 250-key hotel as the client was looking to reevaluate the management contract with the international hotel group.

Horwath HTL Solution: Horwath HTL undertook a full RICS valuation of the project that included Profit and Loss projections, the Discounted Cash Flow method and an evaluation of the projected Internal Rate of Return.

The valuation, which was supposed to help to build up the most relevant financial strategy, was challenging because of the particular hotel market in Disneyland area, which is dominated by Disney hotels, preventing the hotel from gaining market share. Moreover we had to take into account that costs structure was not in line with standard ratios of the category and the on-going management agreement was favorable to the owner. Our financial projections took into account the current operating model of the hotel and the terms of a continued agreement with the operator. This has set the base case of a sensitivity analysis which has been completed at a later stage for the strategic analysis. An investment analysis and operating cash flow analysis were also provided. The value thus calculated has been crossed checked with others methods of approach, including EBITDA multiples and market values, observed in recent comparable transactions in the market place.

Implementation: The hotel valuation was completed at the end of 2013 and the private investor decided to keep the same management contract.

Contact for project: Philippe Doizelet