Valuing a Hotel or Motel
In recent years, the hotel and motel industry has experienced very healthy revenue growth. This is partly due to high travel trends and healthy economic conditions. However, the 2020 pandemic had a detrimental effect on both of these determinants. As travel rates and economic health recover, operators in the hotel and motel industry may have a high revenue growth opportunity. If you are looking to buy, grow, or sell a hotel or motel, it is important to understand how to value a hotel or motel. Understanding the principles of valuing a hotel or motel can help you increase sales revenue and profitability.
Peak Business Valuation, business appraiser, works with individuals who are buying or selling a hotel or motel. We are happy to provide a business valuation to help your hotel or motel succeed. During a business valuation, an expert can help you identify the strengths and weaknesses of your hotel or motel. With this information, you can take the next steps to increase the value of a hotel or motel.
This article highlights a few factors a business appraiser considers when valuing a hotel or motel. However, these are only suggestions. For more extensive guidance, receive a business valuation for a hotel or motel. Peak Business Valuation, business appraiser, is happy to help! Schedule a free consultation with Peak today!
Market Multiples for a Hotel or Motel
The following values are average valuation multiples for a hotel or motel. Business appraisers at Peak Business Valuation use multiples when valuing a hotel or motel.
- SDE Multiple Average Range: 1.14x – 2.54x
- EBITDA Multiple Average Range: 1.57x – 3.34x
- Revenue Multiple Average Range: 0.40x – 0.98x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value a Hotel or Motel
There are a variety of methods experts use to value a hotel or motel. Often, cash flow multiples – SDE and EBITDA are most applicable. However, business appraisers receive extensive training to use their knowledge to determine what methods and multiples are best for your hotel or motel.
Whether you are buying or selling a hotel or motel, it is important to understand what your hotel or motel is worth. Obtaining a business valuation helps you understand what steps to take to increase the value of a hotel or motel. The following paragraphs highlight a few success factors for a hotel or motel. See also, Value Drivers for a Hotel or Motel. For specific information on your hotel or motel, schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors
Peak Business Valuation, business appraiser, values hotels and motels on a regular basis. We can help you understand the importance of the following success factors. With our guidance, these factors can increase the value of a hotel or motel.
Location
First, the location of a hotel or motel has a significant effect on its success. You can increase the demand for your hotel or motel by locating in areas with high travel rates. This may include popular tourist attractions, beaches, or large cities. By carefully considering the location of a hotel or motel, you can maximize sales revenue and profitability. These factors have a strong impact on the value of a hotel or motel. Peak Business Valuation, business appraiser, considers your location when valuing a hotel or motel.
Well-trained Staff
Next, it is essential for a successful hotel or motel to have a well-trained staff. This is the best way to maximize efficiency at your hotel or motel. By having a well-trained staff, a hotel or motel can achieve the following:
- Good Management
- Quick and Thorough Cleaning
- Effective Communication
- Quality Customer Service
- Reduced Cost and Risk
- Improved Safety and Security
There are many more benefits of having a well-trained staff at a hotel or motel. All of these factors help enhance the customer experience. This can lead to customer loyalty and an increase in the value of a hotel or motel. Peak Business Valuation, business appraiser, evaluates your staff when valuing a hotel or motel. For questions, reach out by scheduling a free consultation.
Services and Amenities
Furthermore, it is important to have a variety of services and amenities at a hotel or motel. This is an effective way to differentiate your hotel or motel from competitors. When customers are searching for a good hotel or motel, they often look at the services and amenities that are available. Below are several common services and amenities that you may consider for your hotel or motel:
- Complimentary Wi-fi
- Cable TV
- Pet-Friendly Accommodations
- Pool and Spa Activities
- Food Services
- Bike and Scooter Rentals
- Fitness Center
By having a wide range of services and amenities, your hotel or motel becomes more appealing to customers. This can have a positive impact on sales revenue and profitability at a hotel or motel. During a business appraisal of a hotel or motel, Peak Business Valuation analyzes your services and amenities.
Online Presence
Last, having a strong online presence comes with many benefits for hotels and motels. To start, you can create a website and Google My Business page. Doing so increases the visibility of your establishment to customers who are searching online for a reputable hotel or motel. Additionally, you can use SEO marketing to enhance this effect.
On your website, you can make your hotel or motel stand out by showcasing its features and amenities. With a Google My Business page, your customers are able to leave reviews and ratings on your hotel or motel. Positive ratings are vital in this competitive industry. When valuing a hotel or motel, Peak Business Valuation will analyze the strength of the online presence of your hotel or motel. To learn about SEO, see The Value of SEO.
Summary
The above success factors can help your hotel or motel succeed in this competitive industry. However, there are many other factors to consider when valuing a hotel or motel. Whether you are buying, growing, or selling a hotel or motel, it is important to understand how to value a hotel or motel. To start, receive a business valuation for a hotel or motel. As part of a valuation, you will learn the fair market value of a hotel or motel.
Peak Business Valuation, business appraiser, provides business appraisals for hotels and motels across the country. If you have any questions about how to value a hotel or motel, we are happy to help! Schedule a free consultation with Peak Business Valuation today!
See also Value Drivers for a Hotel or Motel, Valuation Multiples for a Hotel or Motel, and How to Value a Hotel or Motel.
