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
- 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
- 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
- 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.
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