Hotel valuation Morocco — RICS VPGA 4 trading property
A hotel isn't a real estate asset like others: its value jointly results from walls, business, equipment, and clientele. Application RICS VPGA 4 with hotel KPIs and value decomposition for bank, tax, and transfer uses.
VPGA 4 applies to assets whose value depends on the trading activity deployed on them: hotels, operating riads, clinics, restaurants. Three distinct angles converge into one unitary value.
VPGA 4 specificity — trading property
Three distinct values: Walls (asset only) — bare real estate shell. Business (fonds de commerce) — clientele, brand, OTA contracts, know-how, Booking/Tripadvisor ratings. Equipment (FF&E) — furniture, fittings, operational equipment.
Hotel KPIs to know
Occupancy rate = sold nights ÷ available nights. Morocco 2024 reference: 50-75% by segment and season. ADR (Average Daily Rate) = accommodation CA ÷ sold nights. RevPAR = occupancy × ADR. GOP (Gross Operating Profit) = Net revenue – direct operating costs. EBITDAR = GOP – owner charges. FF&E reserve = mobilier/equipment renewal reserve, 3-5% CA per USALI convention.
Operating DCF method and cross-check
Model: rooms revenue = rooms × occupancy × ADR projected. Ancillary revenue: F&B, spa, services. Operating costs: payroll 35-45% CA, energy, laundry, OTA commissions 15-20%, maintenance. GOP. FF&E reserve. EBITDAR. Terminal value = normalised terminal EBITDAR × multiple or ÷ operator cap rate. Discount rate reflects operator's cost of capital (9-14% for 4-5 star Moroccan segment). Cross-check by price per key: 3-star urban MAD 250k-500k/key; 4-star MAD 500k-1.1M/key; 5-star MAD 1.1-2.5M/key; premium resort MAD 2.5-5M/key; Marrakech medina riad MAD 600k-2M/key.
Unitary value decomposition
VPGA 4 produces a unitary value that analytically decomposes for bank and tax uses: walls value (by deduction or separate DRC); business value (clientele, contracts, marketing); FF&E value (mobilier and equipment); intangibles value (brand, ONMT classification, OTA presence). Decomposition essential for: bank mortgage allocation; SCI / operating company separation for tax; pricing for global transfer or business-only transfer.
- Three values distinguished (walls/business/FF&E)
- KPIs sourced from operator data
- DCF projection 5-10 years + terminal
- Operator cost of capital justified
- Price per key cross-check
- Marketing and brand value isolated
- USALI FF&E reserve applied
- Walls and business mixed
- Single method without cross-check
- Operator cap rate too low
- FF&E reserve below USALI 3-5%
FAQ
Why three distinct values for a hotel?
Because each value flows to different stakeholders: walls = property owner, business = operator, FF&E = equipment owner. A unitary value is unusable for bank mortgage allocation, tax structuring, or partial transfers.
What discount rate for a 4-star Marrakech hotel DCF?
Typically 10-13% reflecting operator's cost of capital plus operating risk premium (seasonality, OTA dependence, ADR volatility, competition). Premium 5-star resort: 11-14% reflecting higher concentration risk.
Related reading
- Marrakech riad-hotel valuation — DCF case study
- Riad valuation Morocco — medinas
- Cap rate industrial property Morocco
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