PPP Business Plan 09 03

value of the company
Valuation criteria
The study, “The assessment of hotel companies”, that we have selected to form the Valuation criteria was made by Professor Roberto Moro
Visconti, chartered accountant, statutory auditor and professor of corporate finance at the Catholic University of Milan.
The assessment of hotel companies
Hotel companies have particular features and peculiarities, which are of great importance in the case of their assessment: compared to typically
relevant real estate assets, hotels have different characteristics (stars, number of rooms, location, seasonality, etc.) that affect their profitability
and market estimation when adapting the traditional methods of assessment.
Hotel companies: characteristics and peculiarities
A hotel (etymologically, hostel), is a company that provides accommodation against payment, usually used on a short-term
basis by tourists or for work. In their different types, hotels are different from motels (normally positioned along arterial
roads, outside of urban centers, with services including parking for cars which is not always available in all hotels); from
residences (where people typically stay for longer time); and from bed and breakfast or youth hostels, usually dedicated
to the young.
In addition to the “hotel” function of hosting guests overnight, often they offer - to varying degrees - complementary services,
such as catering activities (bars and restaurants), sports and recreational activities (swimming pools, gyms, meeting
rooms for conventions and meetings, etc.). Some hotels render tailored hospitality services.
The type of clientele (artistic, natural, religious tourism, etc.; corporate clients for trade shows, conventions, etc.) and
seasonality impact the coverage of fixed costs and the opening times; and thus, indirectly, also impact the assessment. The
quality of the hotels - classified by means of stars (ranging from one to five or even more, depending on their growing
degree of luxury) - contributes as a distinctive feature to determining their value.
In Italy - according to statistics of Federalberghi (http://www.federalberghi.it/) - there are the following structures:
Stars Hotels Rooms Beds
5 393 29.645 64.106
4 5.354 349.701 736.311
3-rta 18.034 560.158 1.159.737
2 6.609 110.327 209.944
1 3.438 43.455 80.606
Total 33.728 1.093.286 2.250.704
The evolution of the hotel industry places an increasing emphasis not only on connecting the hotel with transportation
(airports, stations, highways, public transportation, etc.), but also on intangible services related to internet (Wi-Fi - often
free of charge - is now considered a must) and marketing channels as well as booking increasingly focused on the web (with
several specialized sites, such as booking.com; Expedia, etc.), through reviews of users (Trip Advisor, etc.).
The property estimation of the hotel complex (the “walls” and receptive structures, often with an adjoining park, etc.), the
value of the hotel license, in addition to the performance parameters (employment rate; margin generation and cash flows,
etc.) stand out among the main value components.
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