Hotel appraisers adapt methods to COVID-19 uncertainty
Date: September 4, 2020
REPORT FROM THE U.S.—The COVID-19 pandemic and its widespread impact has created a complicated new dynamic for the hotel valuation process.
Hotel appraisal experts are saying valuations require both deep expertise and a much more short-term analytical process than employed in the past. Instead of forecasting hotel performance many years in advance, some appraisers are now reviewing property history and making projections one week at a time. It’s a situation that’s challenging for even the most veteran appraisers. In the past, hotel valuation was often more science than art, following a clear-cut analytical process that could be systematically taught to junior appraisers. Now the prospect of conducting a hotel valuation in the COVID-era world is far more complicated, demanding a considerably deeper skill set.
It’s really requiring appraisers to have senior-level knowledge and abilities, versus somebody who is a year into the business,” said Mike Cummings, Managing Director at Horwath HTL. It’s really challenging for those entry-level appraisers to be able to see through everything and forecast based on what they see. It’s really dependent on the folks who have 15- or 20-plus years of experience, plus an economic and finance background, to be able to get a good understanding of what’s currently going on. It’s challenging to visit properties. … You’ve got to be careful in that situation. Are you actually going to try to value it from your desk? That’s extremely difficult, because now it’s even more important that you have those interviews with the competition and your property managers and get a real sense of the market. Somebody who only appraises a couple of hotels a year could really miss the boat, versus somebody who does nothing but hospitality appraising. Specializing in the hospitality industry really is needed today.”
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