With limited recent sales and survey data upon which to rely, capitalization and discount rates can be developed based on the current cost of capital. Suzanne Mellen, MAI outlines the approach.
Recent trends in hotel capitalization and discount rates are discussed and a basis for developing capitalization rates and discount rates in today’s uncertain market environment is set forth.
And I have attached the edited
A summary on gauging just how much hotel values have been impacted by the recent stock market plunge and impending recession.
Investors are pursuing property turnarounds and repositionings to generate higher yields. Are investors and lenders adequately considering the increased risk of earning future cash flows?
Hotel capitalization rates have bottomed out, as rates of return remain at record low levels and NOI upside has begun to subside. This article updates data that were presented in a previous article on hotel capitalization rates.
Low Cap Rates Drive Gains in Hotel Values
Forecasting gaming revenue for the Macau SAR over the next five to seven years will be particularly challenging primarily due to the current extraordinarily high win per unit per day (WPUPD) and the unprecedented anticipated growth in supply.
Reduced interest rates and lower equity yield requirements have had a substantial positive impact on hotel values. Additional value gains are now being fueled by more aggressive deal underwriting, as discussed in this article.
Low Interest Rates and High Demand for Hotel Assets Fuels Value Gains
When investors and lenders call and ask “what are hotel cap rates today?” the first question is, “what net income are you using in your equation?”