Looking for a rough average of the reductions in hotel real estate value due to Covid? Any opinions or evidence?
Any idea how much hotels values have gone down in the last year or so? I've seen estimates of 10% to 30% reductions. Lower end is less impacted while higher end/destinations/resorts are closer to 30%. Does that seem realistic for Madison, WI.
[{"id": "gnx8kmc", "text": "How much is revpar and occupancy down?  The reason the lower end hasn't been impacted as much is they aren't (as) reliant on vacation travel/spend plus they are picking up some COVID tailwind (family member quarantine, longer duration business stays rather than multiple flights etc.) where it makes sense to spend $100 a night but not $500 a night.\n\nI haven't seen cap rates move yet but we're about to lap y-o-y comps with the pandemic and there's not many sales with all the uncertainty. Terrible time to finance or refinance a hotel that's for sure.\n\nNo idea about Madison.", "replies": [{"id": "gnxbnms", "text": "The financing situation is very interesting/scary. I'm glad none of my paper rolls in the next 3-4 years to say nothing of this year. (Not in hotels, but still)", "replies": [], "depth": 2}], "depth": 1}, {"id": "gnx8q3l", "text": "Hotel appraiser here. The 10% to 30% is about right and heavily dependent on the specific mix of business and demand generators for the hotel you're looking at. I've done limited service properties along highways that came in at 8% below \"pre Covid\" value and huge meeting and group hotels in the 20% to 30% range.", "replies": [{"id": "gnxh9oy", "text": "Thank you for responding. Good to hear you think I'm close.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gnxg9w4", "text": "If you want high quality information on this, you need to go here: https://str.com/", "replies": [{"id": "gnxh5pd", "text": "That gives revenue drops which are about 70% for the year for the market but I'm trying to figure out how that impacts the value going forward.", "replies": [{"id": "gnxj4d1", "text": "They have that as well, but it will cost $", "replies": [], "depth": 3}, {"id": "gnzcmpb", "text": "Someone in here last year said that the revenue is calculated/forecast on a 20 year basis so the current drop is temporary and will not necessarily affect the 20 year revenue whatsoever, thus not affecting prices as drastically as you'd think.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gnxky7w", "text": "I think it is too early to get any real data to determine the value. Much will depend on Government QE and high street bank attitude towards debt towards the sector.", "replies": [], "depth": 1}, {"id": "gnxrw5v", "text": "No idea but I'd take the number of rooms and figure out a yearly revenue for 15 - 30 years.\n\nThen do a cma land (only) value estimate of the surround area\n\nThen probably cut it in half and start there", "replies": [], "depth": 1}, {"id": "gny19a5", "text": "Where is the hotel? In Madison. It is material.", "replies": [{"id": "go07b3v", "text": "I'm looking for market impact rather than for individual values.", "replies": [], "depth": 2}], "depth": 1}, {"id": "go94f3f", "text": "I\u2019ve been looking at hotels in Madison for some time, just based off of 3 data points - 20%, 30%, 60% loss.", "replies": [{"id": "godhoiw", "text": "Value reductions or income reductions? Those seem like income.", "replies": [{"id": "godm6qg", "text": "Ah, my apologies. I misread. Income reductions. I think you can pull the assessed value from the city website if you have the parcel. Can\u2019t think of any other way to pull.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]