The normal model of valuation is very much in the corner of the appraisal world. Comparative sales, NOI and trailing 12 computations, and cost of the hard real-estate. These three methods have been used for a long time. That long time may be shorter in post-Covid valuations.
Typically, hotel operators are not part of the team that provides estimates of value. That will change in the post covid world.
The rapid reduction of NOI due to the dramatic and immediate loss of business in the past 8 months will make using NOI as a determinate for value a bit useless. Same can be said for sales of hotel assets as a comparative to value.
Cost to construct still has a place in the conversation.
The elephant in the room is the operator. They understand the potential of a hotel and what the hotel can produce going forward in a post covid world.
We should be working with operators to get their feelings on future RevPar forecasts based on the past.
In other words, the Covid crisis was just that: a crisis. And yes, it will take some years to get back to 2019.
But get back we will.
And with that the value of the asset using the traditional methodologies.
Time to have some conversations with your hotel operators as a better way to understand the value of a property.