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Hotel Valuation

Hotel valuation: a value-creating asset class

Hotel assets are characterised by their diversity. Each hotel estimate is a special case based on a careful analysis of the asset’s customer segment, services offered and location. Another characteristic that has a significant impact on valuation scenarios for hotels is that they must be regularly renovated to respond to changing consumer expectations.

The hotel investment market is particularly dynamic thanks to solid fundamentals, limited supply expansion and positive growth prospects for the international tourism industry, which recorded 3.9% growth (2016) for the seventh consecutive year (source: UNWTO) with 1,235 million international tourists worldwide in 2016.

Investors see this asset type as an interesting diversification product with a high potential for added value.

  • 2 107

    Amount invested in million euros

  • +110%

    Evolution of the amounts invested compared to 2021

  • 21 €

    RevPAR (Revenue Per Available Room)

S2 2022 - Research - BNP Paribas Real Estate Evolution of the amounts invested compared to 2021

Our expert’s point of view

Pauline Lalot

Breaking down the hotel asset class

What are the characteristics of hotel real estate assets?

Hotel assets are first and foremost characterised by their diversity. The hotel asset class includes: independent and chain-affiliated hotels, business or leisure tourism oriented hotels, hotel residences, hotel shops, resorts, etc.  This diversity can also be found in regard to their locations: large capitals, seaside, mountains....

A major feature common to all hotel assets is that they must be regularly renovated in order to remain modern and up-to-date. Customers' expectations are constantly changing - especially in terms of services - trends are changing, and so are environmental requirements: all factors that can lead to an adaptation of the hotel, ranging from decoration to a complete overhaul of the spaces. BNP Paribas Real Estate - Valuation experts can play an advisory role by proposing several valuation scenarios.

What are investors' expectations?

For several years now, there has been both a densification and diversification of players interested in the hotel industry. Private investors see this asset class as an interesting diversification opportunity. Hotel assets offer a number of advantages over other types of tertiary real estate assets: a holding structure (generally involving a single tenant or operator), cash flow sustainability, minimum vacancy, favourable taxation, creation of capital gains through conversion or renovation and above all an attractive risk/return ratio.

What are the main valuation criteria for a hotel?

In the hotel sector, as in other sectors, location remains an essential valuation criterion. Other criteria are also decisive, such as benefits, ownership structure, operational performance and market conditions.


Urban destination, seaside resort, tourist destination, winter sports resort

Characteristics of the hotel

Number of rooms, amenities and services, quality of facilities, compliance with standards (Public access building, disabled access, environment...), accessibility

Holding structure

Lease, management mandate, franchise agreement, management lease, brand and operator quality

Operational performance

Key performance indicators (occupancy rate, average price, RevPAR), cost structure, management fees, franchise fees, profitability, effort rate

Market environment

Tourism demand, congress and event infrastructures, urban development, hotel offer, competition

Our hotel valuers use traditional methods of capitalising income and discounting cash flows to estimate the value of a hotel asset. They also refer to the most recent market information in order to establish the fairest possible asset value.

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