How Hotels Are Valued
Hotel value triangulates across three methods. When all three converge within a reasonable band, you have a confident value. When they diverge significantly, dig deeper into the underlying assumptions.
1. Income Approach (NOI / Cap Rate)
The dominant valuation method for income properties. Value = Annual NOI ÷ Cap Rate. Lower cap rates = higher value (more demand). Urban full-service hotels trade at 7-8% cap; suburban select-service 8.5-10%; rural and economy 9-12%.
2. Per-Key Comparable
Comparable transactions of similar hotels expressed as price per room. Useful for sanity-checking. Per-key ranges:
- Economy/extended-stay: $40K-$80K per key
- Limited-service (Hampton, Holiday Inn Express): $100K-$180K
- Upscale select (Hyatt Place, Courtyard): $150K-$250K
- Boutique & lifestyle: $250K-$600K+
- Luxury / urban: $400K-$1M+
3. EBITDA Multiple
Value = EBITDA × multiple. Most hotels trade at 8-12x EBITDA depending on segment and growth profile. Useful for repositioning or transitioning properties.
Value works? Ready to finance?
SBA hospitality lenders. 90 seconds, no credit impact.
Get Pre-Qualified →