SERVICE
STATIONS
As with hotels, the
valuation of service stations raises a host of problems including:
- little
market evidence as there are few sales of service stations. Oil
companies have an agreement not to interfere with each other's current
market share.
- the
operator or lessee of an oil company service station does not pay a
market rent. The rent agreed upon is more than market rent and the
operator is then subsidized by the oil company by way of rebates.
- "price wars"
and area discounting complicates the use of turnover as a measure of
value.
- on the other
hand, there is evidence of "price fixing" in certain localities and
areas
- inability
to determine the real profit that an oil company enjoys as the cost of
petrol from the oil well to the service station is paper cost only as
typically, the company controls and owns the subsidiary exploration,
drilling, transport, and processing companies involved.
Further complications
arise from legislation which restricts the number of new stations,
controls the station's operations and taxes the station's turnover. In
such cases the separation of the licence from the real estate component
problem (as with hotels) applies to service stations.