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Valuing Hotel Investments Through Effective Forecasting

Credential Earned: 

Course Focus

For a hotel investment to be successful, you must first have accurate and reliable data about the critical aspects of the hotel operation, such as occupancy, revenue, expenses, and cash flows. But how do you generate these detailed forecasts? In this course, Cornell University professor Jan deRoos leads you through this analysis using the Hotel Valuation Software he developed with HVS International.

Starting with the market study, you will forecast hotel occupancies for new properties and for existing properties and calculate average daily rates using a variety of cutting-edge techniques. Using the occupancy data, you will then forecast hotel cash flows, respecting the fixed and variable revenue and cost structure of a hotel. At the end of this course, you’ll estimate of the market value of the hotel, a critical component of any sound investment decision. Given that forecasts are only as accurate as the starting assumptions, you’ll learn how to develop data to support your forecasts.

With step-by-step guidance and sophisticated software tools, you will walk away from this course with the skills necessary to conduct detailed forecasts and valuations for any hotel property.

Who Should Take this Course?

This course is designed for managers and professionals with financial or operational responsibility of hotel real estate, investments, financing, or asset management including asset managers, and portfolio managers; professionals working for or aspiring to work for real estate funds, REITs, real estate developers, real estate advisory firms, and others affiliated with the creation and use of real estate as a financial asset, focused on hotel real estate investment projects.

Key Benefits

Participants who complete this course will be able to...

  • Perform a market study for a particular property

  • Forecast occupancy and average daily rates

  • Produce accurate forecasts of income and expenses

  • Use the income approach to produce an estimate of market value

  • Produce defensible and supportable estimates using the tools developed in this course

Topics Include

Module 1 - Forecasting Hotel Occupancy

  1. Quantifying Existing Demand in the Primary Market Area
  2. Quantifying Latent Demand and Evaluating the Competitive Market
  3. Finishing the Market Analysis

Module 2 - Forecasting Revenues and Expenses

  1. Forecasting Average Daily Rates (ADR)
  2. The Underlying Theory of Forecasting
  3. Implementation of the Fixed and Variable Component Approach

Module 3 - Valuation

  1. Income Capitalization Approach
  2. Case Study--Valuation of a New Property


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