HOTELS
– INTRODUCTION
The
valuation of hotels introduces the valuer to a host of valuation
problems, the solution of many being determined by experience.
Therefore, hotel valuation is one of the most difficult of all
valuations. The following problems are encountered:
- The influence of the legal
environment on value. Hotels are a regulated land use - licensed use of
land.
- The management problem. ls
the current management average or indifferent management? Management is
a most critical factor in hotel valuation.
- Lack of public domain
information. The trading figures, licence fees and other indications of
value are often confidential. This varies from state/territory to
state/territory.
- The problem of goodwill. The
separation of business value from real estate value.
-
the regulation of land use by way of licence varies with the
intensity, contentious nature and importance of that use. Licenses
are used as a controlling measure for the public good, the most
important reasons being health, safety and a need to curb trade. The
control is shared between the state/territory and local governments.
For example, the objectives of the Liquor Control Art 1987(Vic)
provides typical rationale for the control of hotels and
bottleshops:
- Promoting economic and
social growth in Victoria by encouraging the proper development of the
liquor, hospitality and related industries.
- Facilitating the development
of a diversity of licensed facilities reverting consumer demand.
- Providing adequate controls
over the sale, disposal and consumption of liquor
- Contributing to the
effective co-ordination of the efforts of government and nongovernment
agencies in the prevention and control of alcoholic abuse and misuse.
The
Act (Liquor Control Art (Vic)} 1987) specifically provides that if an
application meets documentary requirements, is unopposed and is
recommended a being in the community interest. it must be recommended
as being granted. If there are objections, preliminary conference
application.