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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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Feature Focus
Hotel Sales & Marketing: The Shift to Digital is Leading the Way
Hotel Sales & Marketing departments have been dramatically transformed in recent years. Advances in technology have prompted changes in consumer buying habits, and these professionals have had to adapt to keep up. Like so many other facets in the industry, the shift to digital is leading the way. An established online presence provides marketing professionals with more direct interaction with their guests; the capacity to collect more detailed information about them; and an increased ability to share their brand stories. These endeavors can be accomplished through website usage but increasingly, social media is assuming a larger role in the digital mix. Social media has moved marketing into a new era. Hotels that offer a good product, at a good value, and consistently deliver that product and price, will benefit from thousands of people who view positive comments on travel review sites. Online reviews continue to be a popular way for users to determine which companies they can trust. And though online marketing may have changed how professionals connect with and convert customers, they still need to focus on traditional marketing channels as well - ones that are cost-effective; protect price integrity; and which generate the most bookings. Some of the larger chains are employing efforts that feature both a top down (global) and bottom up (local) approach to ensure that new business is generated from the greatest number of sources. These include the use of loyalty programs, monthly e-mail newsletters, brand identity tools, advertising campaigns tailored to specific regions, regional marketing co-op programs, and business-to-business marketing campaigns. The November Hotel Business Review will examine some of these critical issues and explore what some sales and marketing professionals are doing to address them.