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How to Make Your Hotel Worth More

Because a hotel is valued on its profit, anything that raises profit raises value, and it raises it by a multiple. At a 9% yield, each extra dollar of yearly profit adds about eleven dollars of value.

The rate

A small rise in your average room rate flows almost straight to profit, because the room costs the same to clean either way. Compare your rate with the nearest hotels, raise it first on the nights that fill early, and check it every week.

Occupancy

More rented rooms bring more revenue, but each extra room night has a cost for cleaning, laundry and supplies. Reviews, corporate and contractor business, and fuller weekdays are the usual places to look.

Costs

Energy, supplies, linen, laundry, insurance and property tax are worth a fresh look. A few percent saved on costs is a few percent more profit, and the value follows. Cutting guest experience is a trap, so cut what guests do not notice.

Clean books

Buyers pay more for numbers they trust. Three years of monthly statements, with personal costs kept out, can lower the yield a buyer asks for.

Check the spending first

Renovation raises value only if it raises your rate or occupancy by enough to pay for itself. Work out what a refresh must add before you spend on it.