Hotel Holding Period
Based on a sample of hotels owned by listed REITs and REOCs in the US, my colleague Dr. Cedric Poretti, CFA and I offer a simple, Excel-based prediction tool for how long would an owner hold a hotel on it’s balance sheet before selling it.
Discount Rate Adjustment
Yes, in most financial assets, if the cash flows have stabilized, their valuation should be independent of the holding period (i.e. how long would an owner keep the asset). However, due to some nuanced valuation practice in commercial real estate, asset valuation is rendered sensitive to the assumed holding period. Industry practitioners, while acknowledging the issue, make arbitrary adjustments to the discount rate. This Excel-based tool developed with Rupesh Thakare and Evgenia Kozorez provides a simple solution.
Hotel Brand Survival
My colleague Dr. Isabella Blengini and I examined a sample of over 60,000 US-based hotels to see what determines their propensity for brand repositioning. This simple Excel-based tool predicts the survival duration of a hotel’s existing brand based on some simple hotel characteristics.