Escolar Documentos
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FINANCEXX
JOHN W. ONEILL
1
Linsley T. Deveau, Patricia M. Deveau, Nestor J. DePortocarrero, and
Marcel Escoffier, Front Office Management and Operations (Upper Saddle
River, NJ: Simon and Schuster, 1996), p. 85.
2
Gary K. Vallen and Jerome J. Vallen, Check-in Check-out, fifth edition
(Chicago, IL: Richard D. Irwin, 1996), p. 234.
3
James A. Bardi, Hotel Front Office Management, second edition (New
York: Van Nostrand Reinhold, 1996), p. 227.
John B. Corgel and Jan A. deRoos, The ADR Rule of Thumb as Predictor of Lodging Property Values, International Journal of Hospitality
Management, Vol. 12, No. 4 (1993), pp. 353365.
See, for example: Alan T. Stutts, Hotel and Lodging Management (New
York: John Wiley and Sons, 2001), p. 87; Ahmed Ismail, Front Office
Operations and Management (Albany, NY: Thomson/Delmar, 2002), p. 174;
and Alastair M. Morrison, Hospitality and Travel Marketing (Albany, NY:
Thomson/Delmar, 2002), p. 523.
2003, CORNELL UNIVERSITY
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FINANCE
9
David Geltner, The Repeated-measures Regression-based
Index: A Better Way to Construct Appraisal-based Indexes
of Commercial Property Value, Real Estate Finance,
Winter 1996, pp. 2935.
10
11
15
Stephen Rushmore and Erich Baum, Hotels & Motels Valuations and Market Studies (Chicago, IL: Appraisal Institute,
2001), p. 233.
12
16
14
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FINANCE
EXHIBIT 1
Descriptive statistics
Hotel
Type
Statistic
Rooms
Occ.
ADR
Cap.
10.6%
10.9
2.4
3.9
17.7
RRM
Price per
room
Property
age (years)
$358,150
$503,584
$425,097
$67,840
$2,019,549
2.92
3.02
0.70
1.57
5.44
$40,361
$41,836
$19,728
$11,228
$113,140
9.5
10.5
7.3
1.0
34.0
NOI
Economy
Median
Mean
Std. deviation
Minimum
Maximum
114
105
42
35
242
65.6%
66.2
13.9
18.5
96.3
$54.09
$56.86
$16.77
$31.50
$99.50
Midscale
Median
Mean
Std. deviation
Minimum
Maximum
160
188
87
56
578
66.7
64.8
12.8
38.6
91.5
$64.50
$66.41
$20.94
$32.25
$128.50
10.7
11.4
2.0
5.1
20.4
$665,300
$1,004,741
$1,107,030
$148,400
$7,100,000
2.46
2.63
0.92
0.70
5.95
$33,646
$46,060
$33,180
$6,931
$158,179
19.0
19.5
12.9
1.0
90.0
Full-service Median
Mean
Std. deviation
Minimum
Maximum
301
349
203
95
1348
71.0
70.1
9.2
36.4
89.5
$101.59
$111.37
$42.53
$42.50
$250.50
10.5
10.1
2.2
1.1
17.9
$2,506,000
$3,410,321
$3,000,856
$155,440
$18,676,000
3.55
3.71
1.30
0.99
9.25
$100,357
$112,179
$72,583
$14,308
$479,167
15.0
20.2
20.1
1.0
98.0
All-suite
without
food and
beverage
Median
Mean
Std. deviation
Minimum
Maximum
128
134
40
66
214
80.5
80.1
7.4
61.1
92.2
$87.36
$94.06
$21.22
$56.25
$159.70
10.9
11.2
1.3
8.3
13.2
$1,188,010
$1,200,869
$542,230
$111,740
$2,450,000
3.49
3.45
0.73
1.21
5.35
$90,919
$97,000
$37,467
$22,664
$194,343
7.0
7.9
6.7
1.0
34.0
All-suite
with
food and
beverage
Median
Mean
Std. deviation
Minimum
Maximum
208
209
62
104
358
69.0
71.1
9.8
56.5
88.4
$85.50
$87.38
$23.74
$45.22
$160.50
10.2
9.6
1.6
6.0
11.8
$1,473,400
$1,700,947
$1,291,571
$342,000
$5,360,000
3.25
3.55
1.78
1.43
8.68
$69,500
$81,288
$44,563
$21,635
$187,151
8.0
7.3
2.6
1.0
11.0
Total
Median
Mean
Std. deviation
Minimum
Maximum
173
219
163
35
1348
70.0
68.7
12.2
18.5
96.3
$78.25
$83.15
$37.28
$31.50
$250.50
10.6
10.7
2.2
1.1
20.4
$980,400
$1,721,277
$2,213,162
$67,840
$18,676,000
3.08
3.21
1.14
0.70
9.25
$59,338
$74,020
$58,330
$6,931
$479,167
11.0
16.1
15.2
1.0
98.0
Appraisal Practice (USPAP),21 it is practical; it continues to be used extensively by owners, investors, and analysts; and such use appears to be justified. Rules of thumb are particularly useful as a
sanity check of more sophisticated analyses.22
21
Appraisal Standards Board, Uniform Standards of Professional Appraisal Practice (Washington, DC: The Appraisal
Foundation, 2000).
22
Shannon P. Pratt, Business Valuation Body of Knowledge:
Exam Review and Professional Reference (New York: Wiley,
1998), p. 85.
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23
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FINANCEXX
FINANCE
EXHIBIT 2
Regression
coefficient
Standardized
beta coefficient
t-statistic
Overall
F value
Degrees
of freedom
Significance
0.790
0.689 *
0.160
0.023
0.002
0.889
0.830
0.400
0.151
-0.039
34.892
14.996
7.859
2.755
-0.648
1217.440
667.180
61.762
7.591
0.420
1, 324
1, 324
1, 324
1, 324
1, 324
p < .001
p < .001
p < .001
p < .01
p > .10
* This regression coefficient increased slightly to 0.709 when the response variable was changed from sale price per room to sale price.
26
See: Joseph K. Eckert, Patrick M. OConnor, and Charlotte Chamberlain, Computer-assisted Real-estate Appraisal: A California Savings-and-loan Case Study, The
Appraisal Journal, October 1993, pp. 524532; John H.
Detweiler and Ronald E. Radigan, Computer-assisted Realestate Appraisal: A Tool for the Practicing Appraiser, The
Appraisal Journal, January 1996, pp. 91101; and John H.
Detweiler and Ronald E. Radigan, Computer-assisted Realestate Appraisal: A Tool for the Practicing Appraiser, The
Appraisal Journal, July 1999, pp. 280286.
27
See: Detweiler and Radigan (1996), op. cit.; and Detweiler
and Radigan (1999), op. cit.
28
The multiple regression model is: Predicted Value per
Room = [-$83,219 + ($690 Occupancy) + ($1,323
ADR)].
29
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beverage). The ADR rule of thumb has not previously been evaluated in this manner. Therefore,
I conducted regression analyses for each individual hotel type with ADR as the predictor variable and sale-price-per-room as the response variable. Each of these individual analyses resulted
in significant regression coefficients (i.e., p < .01
for each of the five hotel types). In addition, I
conducted an analysis of variance (ANOVA) to
determine whether the results for the five different hotel types were statistically different from
the overall mean for all hotels for both ADR per
$1,000 in value per room and $1,000 in value
per room per ADR. In both cases, these results
were significant as measured by Levenes statistic
(Levene = 12.829, p < .001, and Levene = 5.709,
p < .001, respectively). Further, by analyzing the
95-percent confidence interval for the mean for
both overall ADR/$1,000 in value per room
($1.41 to $1.58) and $1,000 in value per room/
ADR ($773 to $844), it is clear that each of the
individual group means presented in Exhibits 3
and 4 is either above or below the overall confidence intervals, distinguishing the mean of each
hotel type group from the overall mean.
In addition, viewing the standard deviations
by groups as presented in Exhibits 3 and 4 reveals that most of the group standard deviations
are lower than the overall standard deviations,
providing further support for the analysis of data
by the five hotel-type groups. However, the width
of the standard deviation is indicative of the extent to which the economics of an individual
property may vary from the mean, and why the
ADR rule is simply a rule of thumb and not a
rigorous valuation model. Previous research has
found that actual real-estate appraisals of commercial properties vary from sale prices by a standard deviation of only about 4.9 percent.30
Like NOI, occupancy and sale date were not
as strong predictors of hotel-sale price as was
ADR. Neither was property age a significant predictor of sale price, consistent with previous re-
FINANCEXX
search.31 Though the database contains information regarding both capitalization (cap) rate and
room-revenue multiplier (RRM) by case (sale
transaction), those variables were not analyzed
30
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31
FINANCE
EXHIBIT 3
Hotel Type
Median
Mean
Rounded
SD
Economy
$711
$720
$700
$205
Midscale
$571
$634
$600
$293
Full service
$932
$948
$900
$343
$1,016
$1,003
$1,000
$204
$792
$910
$900
$387
All hotels
$792
$809
$800
$325
EXHIBIT 4
Hotel Type
Median
Mean
Rounded
SD
Economy
$1.41
$1.50
$1.50
$0.44
Midscale
$1.75
$1.99
$2.00
$1.12
Full service
$1.08
$1.22
$1.20
$0.56
$0.99
$1.05
$1.00
$0.33
$1.26
$1.32
$1.30
$0.66
All hotels
$1.26
$1.50
$1.50
$0.81
32
Appraisal Institute, The Appraisal of Real Estate, eleventh
edition (Chicago: Appraisal Institute, 1996).
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EXHIBIT 5
Dollars
$1,000
$800
$600
$400
$200
$0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
Similarly, for each of the 327 hotel-sale transactions, I calculated the hotels ADR that corresponds with $1,000 in value per room. When
analyzed on the basis of hotel type, my results
were similar to those previously presented, except that the magnitude of the figures roughly
reverses (that is, mean figures are not exactly reciprocal whereas median figures may be reciprocated between the two analyses).
For example, while all-suite hotels without
food and beverage generate a mean of $1.05 in
ADR per $1,000 in value per room, midscale
hotels must generate almost twice as much in
ADR to result in $1,000 in value per room (i.e.,
$1.99 in ADR per $1,000 in value per room). In
other words, midscale hotels must achieve substantially higher room rates to generate comparable values to other hotel types (see Exhibit 4).
An analysis of the residuals (the difference between predicted and actual sale price for each
hotel-sale transaction) revealed that residuals may
be predicted by the number of hotel guest rooms,
occupancy, ADR, and age. This analysis, which
applied multiple regression analysis with the residual serving as the response variable, also indicated that each of the five hotel types was a significant predictor of the residual (as expected).
In short, my analysis revealed that residuals are
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