Stephen Rushmore is President and Founder of HVS, a global hospitality consulting organization with offices in New York (Mineola), San Francisco, Miami, Boulder, Dallas, Vancouver, Toronto, São Paulo, Buenos Aires, London, New Delhi, Singapore, Madrid, and Sydney. He directs the worldwide operation of this firm and is responsible for future office expansion and new product development. Mr. Rushmore has provided consultation services for more than 12,000 hotels throughout the world during his 35-year career and specializes in complex issues involving hotel feasibility, valuations, and financing. He was one of the creators of the Microtel concept and was instrumental in its IPO.
I always wondered how a hotel would operate financially if it were located in different parts of the world. To demonstrate these differences and show the impact on the net income, I developed the following side-by-side comparison of the revenue and expense for a proposed 200-room Marriott type hotel, assuming it was located in the following five regions: China, Europe, India, South America and th...
Rushmore Observations: Hotel demand continues to grow - Construction financing is still scarce - Limited growth of new hotel supply - Extended period of increasing hotel values - Don't be afraid of low cap rates - If you missed the bottom, there is still plenty upside available - Now is the time to buy - Don't sell until 2012-2013
When designing a hotel, the architect and development team need to create a project that is ultimately economically feasible. Unless the hotel's owner is ego driven rather than economically motivated, most investors are looking for a return on their invested capital. Since feasibility means different things to different people, and as a hotel consultant having prepared thousands of feasibility st...
Each year I give a state of the U.S. hotel industry presentation at the NYU Hotel Investment Conference. My perspective focuses on values, transactions and capitalization rates. My column this month provides highlights of the assessment. Hotel Values: HVS tracks the value of a typical hotel in the U.S. through our Hotel Valuation Index (HVI). The following table shows the value per room plus the ...
When applying for a mortgage on your hotel, it is usefull to understand the various analytical tools lenders use to evaluate the size and terms of the loans they are making. Until a few years ago, the preferred becnhmark lenders used was the debt coverage ratio. recently, a new tool called the debt yield ratio came into vogue, which seems to be used by most hotel lenders today. Let's look at both...
We've recently seen a number of hotel transactions showing capitalization rates below 5%. In fact, some major transactions were yielding cap rates of only 2% to 3%. In the past, the standard hotel cap rate generally ranged from 8% to 12%. Why are cap rates so much lower today, and is cap rate the best way to value a hotel?
Steve Rushmore's April 2010 article for Lodging Hospitality. In a typical year, 400 to 500 hotels change hands in the U.S. This volume of transactions is significantly higher than any other region of the world. With the massive recession contributing to a huge erosion of operating profits, hotel owners are facing property value declines of 40 percent to 60 percent in many parts of the country. Co...
One of the most important aspects of owning and operating a hotel is minimizing the various physical and liability risks associated with this type of business. Risk management is the process of evaluating a hotel's risk exposure and developing strategies for mitigating those. It incorporates a program for reducing exposure supplemented by insurance protection should an incident occur. A hotel own...
As we approach the bottom of this economic cycle, hotel owners need to review their property tax assessments to determine whether their properties have been accurately valued by their local taxing-jurisdictions. Chances are likely the value determined by the assessor will be greater than the hotel's current market value, which means that a property tax appeal could be in order.
