This article proposes the cost approach as an alternative that avoids the pitfalls associated with income capitalization. It is a method that most assessors use every day. This article highlights the strengths of the cost approach in general, and then demonstrates the effectiveness of the cost approach in the valuation of lodging facilities. Using an operating hotel property, this article demonstrates that, for limited-market properties such as hotels, the cost approach is just as useful a valuation tool as the sales and income approaches and avoids the complexities and nebulousness involved in extracting enterprise value.
Replacement cost approach to value, Hotels and taverns
Jorczak, T. A. (2016). The cost approach and hotel valuation: a classic solution to a modern problem. Journal of Property Tax Assessment & Administration, 13(2), 35-49. Retrieved from https://researchexchange.iaao.org/jptaa/vol13/iss2/2