An essential part of conducting any ‘trading’ valuation is to understand the business concerned and the underlying trends in the industry. This paper examines the recent, rapid growth that the hotel and tourism industries have experienced worldwide. Today, hotels and tourism are seen as one of the few potential growth industries of the present decade. Recent evolutions in the market and their implications for the valuation of the hotel product are discussed. Private sector investment criteria in the hotel industry are considered. Professional valuations are more than opinions, in that they require selective research into the appropriate market area; assembly of pertinent data; application of appropriate analytical techniques; and knowledge, experience, and professional judgement necessary to develop a conclusion that is appropriate. The three basic approaches to the matter of establishing value are examined briefly. Exhibits illustrate the range of values that can be thrown up by these different methods and a typical profit and loss forecast for a medium size (200 rooms) first class hotel, upon which some methods of valuations are based, is presented.
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