The Value of Hotel Expert Witnesses
When the need arises to settle differences and resolve disputes between operators, brands, owners,
First of all, in order to properly frame the analysis of the acquisition under consideration, it is highly advisable to carry out first an analysis of the market in which the hotel properties are located. This exercise will allow us to contextualise and take into consideration appropriately the conclusions subsequently drawn from the review of each individual asset.
When examining each market, we will analyse performance data, the structure of the hotel and tourist apartment supply in the destination, the observed trends in this location, latent market opportunities, the historical evolution of demand generators, and other relevant factors.
Hotel due diligence process
Secondly, once the market context of each asset has been established, we will address the key areas of each hotel property.
We will verify the legal and planning situation, analyse departmental results, assess the labour situation of each hotel, review the condition of the facilities through an engineering inspection, identify potential capex requirements, evaluate the business and commercial positioning of each hotel within its market, and determine the property’s goodwill and its potential value-creation upside.
Finally, all the information gathered will be consolidated and the value of each asset will be determined using the most appropriate valuation methodologies in each case (discount rates, comparable transactions, multiples, replacement cost, etc.).
The final recommendation report will allow us to draw conclusions regarding the most suitable value-generation strategies for each asset, the optimal operating and commercial model, the efficiencies to be achieved, and other key considerations. A SWOT analysis will summarise the final recommendations regarding the advisability of proceeding with the acquisition and its estimated return.
In summary, conducting a hotel due diligence proves to be an essential and extremely valuable tool when facing a strategic decision of such magnitude as the acquisition of one or more hospitality real estate assets.
Beyond being a technical procedure, due diligence constitutes a knowledge-driven process that enables investors to minimise risk, maximise value and anticipate the future evolution of the asset within its competitive context.
