In brief: The dominant method is a DCF over 8-10 years on the operating free cash flow, in line with RICS VPGA 4 (Trade-Related Property). Critical KPIs: RevPAR, occupancy rate, ADR, GOP margin, EBITDA per room. Hospitality cap rate in Marrakech 2026: 7-9% (prime Medina), 8-10% (Hivernage), 9-11% (outlying Palmeraie). Always distinguish real estate value (the building alone, no brand or operation) from going-concern value (brand + recurring cash flow). RevPAR benchmarks 2026: 1,200-1,800 MAD/day (premium Medina), 800-1,200 (Hivernage), 600-900 (Palmeraie).
1. Real estate vs going concern — the critical distinction
When an investor buys a boutique hotel, they acquire two superimposed things: (1) the building and the land (the bricks and mortar), and (2) the ongoing operation (the brand, supplier contracts, recurring clientele, trained staff, OTA contracts). RICS VPGA 4 requires the valuer to distinguish these two values.
The real estate value is what a property buyer would pay for the building alone (without the operation taken over). The going-concern value is the total value including the ongoing business. The gap can reach 20-40% depending on maturity and profitability.
2. Hotel KPIs and their impact
| KPI | Definition | Marrakech 2026 benchmark |
|---|---|---|
| RevPAR | Revenue per available room | 600-1,800 MAD/day |
| ADR | Average daily rate sold | 900-2,500 MAD/night |
| Occupancy rate | Rooms sold / available | 55-75% |
| GOP margin | Gross operating profit margin | 30-42% |
| EBITDA / room | EBITDA / number of rooms | 60-180k MAD/year |
3. Worked example — 12-room boutique hotel, Marrakech Medina
Boutique hotel established 6 years ago in the Marrakech Medina (prime Derb, near the Bahia). 12 rooms arranged around 2 patios, a 30-cover restaurant, a hammam, a rooftop terrace. Old building renovated to a high standard, usable area 850 m².
4. Cap rates by Marrakech district 2026
| Location | Cap rate (going concern) | Cap rate (real estate) |
|---|---|---|
| Prime Medina (Bahia, Mouassine) | 7.0 - 8.5% | 9-11% |
| Off-prime Medina | 8.5 - 10% | 10-12% |
| Hivernage / Gueliz | 8 - 10% | 10-12% |
| Palmeraie (converted residential) | 9 - 11% | 11-13% |
The going-concern cap rate captures the building plus the ongoing operation; the real estate cap rate, higher, reflects the building alone. The gap between the two columns is exactly the value of the operation — brand, recurring clientele, trained staff — that RICS VPGA 4 requires the valuer to isolate.
Valuation of a boutique hotel or riad
RICS-certified experts — RICS VPGA 4 method, DCF + cap rate, distinction between real estate and going-concern value. Reports compliant with RICS (Red Book) standards, anywhere in Morocco.
FAQ
Which method dominates for valuing a boutique hotel?
Discounted cash flow (DCF) over 8-10 years on the operating free cash flow, in line with RICS VPGA 4 (Trade-Related Property), cross-checked against a hospitality cap rate. A boutique hotel is not valued like a residential riad or a buy-to-let building.
What is the difference between real estate value and going-concern value?
The real estate value is what a property buyer would pay for the building alone, without the operation taken over. The going-concern value is the total value including the ongoing business. The gap between the two can reach 20-40% depending on maturity and profitability. RICS VPGA 4 requires the valuer to distinguish them.
What are the key hotel KPIs in Marrakech in 2026?
RevPAR 600-1,800 MAD/day, ADR 900-2,500 MAD/night, occupancy rate 55-75%, GOP margin 30-42%, and EBITDA per room 60-180k MAD/year. These benchmarks frame the cash-flow projection underlying the DCF.
What are the hospitality cap rates by Marrakech district in 2026?
Going concern: prime Medina 7.0-8.5%, off-prime Medina 8.5-10%, Hivernage / Gueliz 8-10%, Palmeraie 9-11%. Real estate cap rates are higher (roughly 9-13%), reflecting the building alone without the operation.
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