Hospitality Insight
When an assessment asks a hotel to do what it never has
October 2026
Every assessed value on a hotel asserts that it can fill its rooms at a given rate and cost. This paper shows a repeatable test, run on three disguised hotels in Minnesota, Texas and Vermont, of whether an assessment asks for performance the hotel has never achieved.
Executive summary
An assessed value on a hotel carries a promise: that the hotel can fill a certain share of its rooms, at a certain rate and cost, for long enough to justify the number. A hotel keeps an unusually complete record of what it has actually done, so the promise can be tested against that record.
The assessment battery is a repeatable test built for that purpose. It starts from the appraiser’s own projection and changes one thing at a time. It reads four ranges from the hotel’s own file, runs 41 tests, and solves for the occupancy the assessment needs at four rate lifts: none, 10, 20 and 30 percent. Each result is marked inside or beyond the hotel’s own record.
Three disguised hotels show how it reads. Money is indexed so that each assessment equals 100.
- Hotel A, a large urban full-service hotel in Minnesota. Nothing in the record reaches the assessment. A full hotel at today’s projected room rate stops at a taxable value of 68. Only rates 20% or 30% higher reach it, at 91.0% or 82.9% occupancy, against the hotel’s best year of 46.3%.
- Hotel B, a select-service hotel in Vermont. Demand alone fails: the assessment needs 75.0% occupancy against a best year of 72.3%. But with departmental costs at the leanest quarter of comparable hotels the value lands at 99, and with every banded cost line at the peer median it lands at 106. The disagreement moves to what the hotel costs to run.
- Hotel C, a resort and spa in Texas. At the appraisal’s room rate the assessment needs 75.1% occupancy, against a best year of 57.7%. It is reachable only at room rates the market has not supported.
The battery does not prove a value; the appraisal does that. What it shows is whether an assessed value depends on performance the property has never achieved, and by how far.
Author
The question an assessed value asks
Every assessed value on a hotel carries a promise. A value is an income capitalized, and a hotel’s income is rooms sold at a price, less the cost of selling them. So a figure on the roll quietly asserts that the hotel can fill a certain share of its rooms, at a certain rate and a certain cost, for long enough to justify the number.
Most appeals argue about the figure. Fewer ask about the promise, yet the promise is where an assessed value is easiest to test, because a hotel keeps an unusually complete record of what it has actually done: the occupancy it has run year by year, the rates its market has grown at, the costs it has carried.
The battery asks a plain question: which combinations of occupancy and rate would reach this value, and has this hotel ever earned any of them?
This paper shows it on three hotels assessed in three states, Minnesota, Texas and Vermont. The answer does not replace an appraisal. It sits beside one, inside the analysis of highest and best use the appraisal standards already require, and it turns a disagreement about a number into a question of evidence.
The battery in five steps
The method is deliberately mechanical. It starts from the appraiser’s own projection, so it argues with no assumptions but the appraisal’s, and it changes one thing at a time, so every result can be traced.
- Start from the projection as filed. The appraiser’s own forecast of occupancy, rate, costs and exit is the baseline run. Nothing in it is altered before the tests begin.
- Read the hotel’s own record. Four ranges come from evidence already in the file: the hotel’s own year-end occupancy, from its lowest year to its highest; its competitive set’s yearly room-rate growth; the middle half of the industry cohort’s costs, line by line; and the published range of exit capitalization rates. Years the pandemic and its recovery distorted are set aside, and each one is named.
- Run 41 tests, one change at a time. Reference runs (the model with no appraiser input, the projection as filed, a floor and a best case); demand runs across the hotel’s own occupancy history; single changes to rate growth, costs and the exit rate; stacked combinations; and a grid that lifts rate and occupancy together.
- Solve for the occupancy the roll needs. At each of four rate lifts (none, 10, 20 and 30 percent), the model searches for the stabilized occupancy at which the taxable value, after intangible and personal property are removed, lands within one percent of the assessment.
- Mark every result against the record. Each run and each solve is labeled inside or beyond the hotel’s own record, naming every range it breaks and every range it holds. No adjective is attached.
Nothing in the method depends on one state’s rules: the same five steps read the assessments in Minnesota, Texas and Vermont below. The battery reads the pattern, never a single run. One favorable run proves little. A pattern in which every route to the assessment passes through territory the hotel has never occupied proves a great deal.
Hotel A: a large urban full-service hotel in Minnesota
Hotel A is a large full-service hotel in a Minnesota city center that opened in the pandemic, three years before the date of value. Its assessment, indexed here to 100, rests on a hotel whose own statements show a net loss for 2023. Two limits apply to this case and are stated up front. No appraiser’s projection was loaded into the battery, so it starts from the model’s own projection of the hotel, which prices the going concern below zero (-21) and the taxable value at -34. And the hotel’s own record is short: two full years from its operating statements, 2022 at 31.9% occupancy and 2023 at 46.3%; 2021 is set aside for the pandemic, and 2024 was reported after the date of value. No operating cohort was on file for costs, so the battery’s twelve cost tests did not run.
No route through the record reaches the assessment. At today’s projected room rate the assessment is not reached even with the hotel 99% full: the taxable value stops at 68. At rates 10% higher, a full hotel still stops at 96. Only with rates 20% or 30% higher does any occupancy reach 100, and it takes 91.0% or 82.9%, nearly twice the best year this hotel has run. One of the 41 tests stays inside the record, and it lands far below the assessment.
Here the limits do not change the reading. A short record and a starting point that is the model’s rather than an appraiser’s would matter if the answer were close. It is not: the assessment asks this hotel for an occupancy far above its whole market’s, at rates it has not charged, and the battery shows that before any judgment about costs or exit rates enters.
Hotel B: a select-service hotel in Vermont
Hotel B is a select-service hotel of a national brand in a small Vermont market. Its assessment, indexed here to 100, sits well above the appraisal’s concluded taxable value of 60. The appraiser’s projection stabilizes at 66% occupancy, inside the hotel’s own year-end range of 63.7% to 72.3%. That range reads four full years: 2018 and 2019 before the pandemic, 2024, and the twelve months to March 2025; the pandemic years, and two years when the hotel took payments under a state emergency housing program, are set aside.
The demand route fails. At the projected room rate, the assessment needs 75.0% occupancy, close to three points above the best year this hotel has run. Raising the rate does not rescue it: past a lift of about 2%, the rate implies growth the competitive set has never shown, so every row below that line is beyond the record on rate even where its occupancy looks ordinary.
But the assessment is not out of reach, and the battery says so as plainly. Ten of the 41 tests stay inside the record, and one of them reaches the assessment: the departmental costs alone (rooms, food and beverage, and the other operated departments) held at the leanest quarter of comparable hotels, every other line as projected and occupancy at the projection’s own 66%, lands at 99. The question for this appeal moves from demand to cost: with every banded cost line, the departmental and the undistributed costs alike, at the peer median, the value lands at 106, above the assessment, because it moves the undistributed costs as well, where this hotel sits furthest from its peers. Here the battery puts the disagreement where it belongs, on what this hotel costs to run against its peers, a narrower question than the one the appeal began with, and one the hotel’s own books can answer.
Hotel C: a resort and spa in Texas
Hotel C is a resort and spa in Texas. Here the battery starts from the delivered appraisal’s own projection, which stabilizes at 58% occupancy and concludes a taxable value of 25 against the assessment’s 100, after the business intangibles are removed as the appraisal elected. The resort’s own record runs from 55.1% to 57.7% occupancy over 2022, 2023 and 2024, so the appraisal’s own projection already sits a shade above its best year. The appraisal’s exit rate, 9.00%, sits above the published 8.00% to 8.25%: a judgment the appraisal states and supports, printed here beside the published range rather than read as a failure.
The assessment asks for a resort this one has never been. At the appraisal’s room rate it needs 75.1% occupancy, against a best year of 57.7%. Rates 10% or 20% higher still need 67.1% or 60.4%. Only at rates 30% higher does the occupancy needed (54.8%) fall to about the resort’s lowest year, and those rates imply growth far beyond the -2.1% to 1.4% a year its competitors have shown.
Three of the 41 tests stay inside the record, and none comes near the assessment. The closest lands at 24. For this resort the battery moves the question from occupancy to rate: the assessment is reachable only at room rates the market has not supported.
What it means in an appeal
The battery does not prove a value; the appraisal does that. What it shows is narrower and often more persuasive: whether an assessed value depends on performance the property has never achieved, and by how far.
What reaches each assessment, and what the hotel’s record shows.
Method notes and limits
The battery belongs to the analysis of highest and best use under the Uniform Standards of Professional Appraisal Practice: it asks whether a use, at a stated level of performance, is financially feasible at the assessed figure. It holds the appraiser’s projection constant except for the input under test, so its results are only as sound as that projection.
Frequently asked questions
What is the assessment battery?
It is a repeatable test of whether an assessed value is reachable at the occupancy and rate a hotel can actually earn. It starts from the appraiser’s own projection and changes one thing at a time: 41 tests, then four solves for the occupancy the assessment needs at rate lifts of none, 10, 20 and 30 percent. Each result is marked inside or beyond the hotel’s own record.
Why does it start from the appraiser’s own projection?
So that it argues with no assumptions but the appraisal’s. Because it changes one thing at a time, every result can be traced to a single input. The same design means its results are only as sound as that projection, since the appraiser’s projection is held constant except for the input under test.
What counts as a hotel’s own record?
Four ranges drawn from evidence already in the file: the hotel’s own year-end occupancy, from its lowest year to its highest; its competitive set’s yearly room-rate growth; the middle half of the industry cohort’s costs, line by line; and the published range of exit capitalization rates. Years distorted by the pandemic and its recovery are set aside, and each one is named.
What did the battery show for the three hotels?
For Hotel A in Minnesota, no route through the record reaches the assessment: a full hotel at today’s projected room rate stops at 68, against an assessment indexed to 100. For Hotel B in Vermont, demand alone fails, but costs at peer levels reach 99 and 106, so the question becomes what the hotel costs to run. For Hotel C in Texas, the assessment needs 75.1% occupancy against a best year of 57.7%, so the question becomes rate.
Does the battery prove a value or replace an appraisal?
No. The battery does not prove a value; the appraisal does that. It sits beside an appraisal, inside the analysis of highest and best use that the appraisal standards already require. What it shows is narrower: whether an assessed value depends on performance the property has never achieved, and by how far.
What lies outside the battery?
Proving a value, forecasting next year’s performance and rescuing a weak projection all lie outside it. Inside it are ranges read from the appraisal’s own file with every exclusion stated, demand judged on the hotel’s own occupancy rather than its share of the market, and whether the assessment asks for what the hotel has already done.
How should the figures in the charts be read?
Money is indexed so that each hotel’s assessment equals 100. Room rate is indexed so that the projection’s stabilized rate equals 100. Occupancy is each hotel’s own percentage. The hotels are named by type, size and the state that assessed them only.
Horwath HTL: Hospitality Valuation & Advisory Services
Horwath HTL provides specialized hotel valuation, litigation support, and real estate advisory across the Americas. Our US valuation practice delivers independent, audit-ready appraisals, financial reporting valuations, property tax appeal assessments, and transaction due diligence for hotel owners, lenders, institutional investors, and law firms.
| Bryan Younge, MAI, ASA, FRICS is Managing Partner, USA with Horwath HTL, specializing in complex hotel valuations, expert witness testimony, and real estate advisory. He leads the firm’s US practice, advising global hotel brands, ownership groups, lenders, and counsel on portfolio valuations, tax appeals, litigation support, and high-stakes hospitality transactions. To discuss your U.S. hospitality valuation or advisory requirements, contact Bryan at byounge@horwathhtl.com or reach out to your local Horwath HTL office. |  |
Horwath HTL. Market commentary and method for general information; not an appraisal or an opinion of value of any property. The hotels described are disguised.