London - Success Stories

The Four Seasons Florence

Project

HVS was asked to appraise the proposed Four Seasons Florence (‘the Hotel’). The proposed Hotel is located in a residential area at Via Borgo Pinti 99, in Florence, approximately 15 minutes’ walk from the Duomo Cathedral in the city centre and an equal distance from the Fortessa Da Basso congress centre.

The Hotel, located in the largest privately owned garden in Florence, comprises several sixteenth-century buildings including a former residential palace and a convent. Situated in an enclosed and gated area, the historic buildings are currently being converted into luxurious hotel accommodation and meeting space with all modern technological advances while preserving the rich history and original style of the properties. The Hotel is full of historic structures and artefacts, some of which are under protection orders, including many sixteenth-century frescoes, hand-painted floors and ancient Chinese wallpaper. Most of the rooms and suites have a garden view. The Duomo cathedral and historic city centre can be seen from some of the rooms.

The Hotel’s envisaged soft opening is in April 2008 with 79 rooms and the full opening is in June 2008, taking the room count up to 117.

Four Seasons, as one of the most upscale hotel operators, has taken on this unique opportunity to operate a world-class product that should establish itself as the market leader in Florence within a short space of time.

The HVS Assignment

HVS was instructed to perform a feasibility study and valuation of the proposed Hotel including facilities such as a spa, food and beverage outlets and meeting and banqueting outlets.

HVS was chosen because the client felt it to have the required ability, experience and existing relationships in Italy and throughout Europe in order to make reasoned and valid judgements on the feasibility of a product that is unique in its local market, to quantify its probable future performance and to reflect this accurately in an estimate of how the occupier and investment markets would regard the property in the event of a sale.

HVS inspected the proposed Hotel’s site and analysed its accessibility, the demand for hotel accommodation in the area and identified local demand generators together with anticipated future growth trends. HVS also investigated existing and proposed competitive hotels in the surrounding area. HVS undertook considerable analysis to understand not only the Florence hotel market but also the market for luxury hotels in Italy in order to understand the dynamics of leisure trips in Italy (Rome, Florence and Venice).

HVS then prepared a ten-year projection of income and expense based on the data and information gathered during field work, along with the use of extensive in-house databases of actual hotel operating statements, financial statistics, area hotel trends and investor requirements.

Results

From HVS’ extensive knowledge of valuing hotels, different valuation scenarios have been prepared including the value as at the opening date, as of today, as at the stabilised year and free and clear.

From the results of the feasibility study, the owner successfully secured debt financing with its chosen lenders, Hypo Real Estate Bank International AG and MPS Capital Services Banca per le Imprese SpA.