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  • Finance & Investment
  • Due Diligence Procedures for Hotel Appraisals

  • What is the first thing that comes to mind when you hear the phrase "business valuation"? Mathematics? Formulas perhaps? Maybe even WACC (weighted average cost of capital) for those of you with a MBA. The end product of an appraisal is often a numerical value and people sometimes perceive the process to be math intensive. Although it is true that the use of formulas and equations is essential to the valuation procedure, due diligence procedures encompass far more than mathematical models. The importance of due diligence research cannot be overlooked because of its crucial role in justifying the outcome of a valuation.

    There are many factors that directly influence the value of a subject business or hotel, and they can generally be classified under the following three main areas contributing to value: company environment, industry dynamics and economic conditions. These factors then form different aspects of due diligence research. In the following paragraphs, we will discuss the three areas of due diligence research in more detail.

    Company research encompasses several different factors, and in most cases, these have the most direct impact on a company's day-to-day operations. Some examples of company research are customer demographics, management/directorship structure, suppliers, advertising and intellectual property. ...

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Coming Up In The January Online Hotel Business Review


Feature Focus
Mobile Technology: The Game Has Changed Forever
Consider these astounding numbers - it is forecast that in 2016 there will be 196 million smart phone users in North America alone. Worldwide the number of users is expected to surpass 2 Billion. According to hotel internet marketing firm HeBs Digital, currently more than 21% of online bookings and nearly 19% of room nights are generated from mobile devices (smart phones and tablets), while 45% of web visitors and nearly 40% of page views originate from them as well. Consumers are also increasingly using their smart phones for search queries, with more Google searches taking place on mobile devices than on computers in 10 countries, including the U.S. and Japan. Advances in mobile technology have changed the game forever and for hotels, that means having a mobile strategy is now as critical and necessary as having an Internet presence. Hotels must engage guests/travelers on their mobile devices and to add value to their experience. Mobile check-in, mobile payment options and mobile SmartKeys are quickly becoming commonplace features, as is the capacity for guests to place requests for all hotel services directly from their mobile device from anywhere on the property. In addition, some larger chains are creating their own apps which serve to enhance other facets of their operations - marketing, branding, cross-selling and impulse buying - all of which contribute to increased revenue and guest satisfaction. Still other companies are experimenting with the potential uses of wearable technology and the possibilities of geo-targeting promotions. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in this mobile space, and will report on the solutions that are proving to be most beneficial for both companies and their guests.