Journal of Property Tax Assessment & Administration


Hotel properties differ from other forms of real estate in many ways which, in turn, result in numerous tax assessment issues for municipal property assessors and appraisers. “Hotels” or hospitality related properties include a mix of uses, including lodging, food and beverage service, meeting rooms, recreational and fitness facilities, etc. The hotel industry is a complex and volatile business. Assuming competent management, a lodging facility’s success is dependent on its identity and/or brand affiliation, design, the location/quality of the real estate, and furniture, fixtures, and equipment (FF&E). Unlike other forms of commercial real estate, lodging facilities do not benefit from longterm leases or credit tenancies. Since the pricing of room nights continuously changes, hotel profits are highly susceptible to immediate and in many cases dramatic uncontrollable external forces. Examples include geopolitical changes, financial crisis, energy costs, terrorism, crime and civil unrest, climate and environmental factors, health crisis and pandemics, and government reforms and policy changes. The purpose of this paper is to provide factual information relative to (1) how operating hotels are managed, priced for sale, and properly appraised based on market behavior, and (2) to expose appraiser myths and valuation methodology involving the going concern premise that does not reflect market behavior but is often used in appraisals prepared for owners of hotel real property specifically for tax assessment appeal purposes.


Hotels and taverns