PPP Business Plan 09 03

value of the company
The services and hotel infrastructure are traditionally represented by a lobby with an entrance hall, which - on a visual
level - is the “business card” of the hotel (visits are often preceded by online virtual “site inspections”); a reception or a
front office for checking-in (which in more evolved hotels can be done completely online, similarly to online check-in for
a flight); the internal common areas (bar, restaurant, lounge, etc.) as well as the external ones; technical and service areas,
(not accessible to customers); the room-plan, rooms with beds and bath cells. All these parameters affect the evaluation.
The generated revenue per available room is a traditional indicator of the sector, which allows us to carry out comparisons
between different hotels, establishing the economic value of a single room, also taking into consideration the occupancy
rate and the associated number of sold rooms (room nights). Revenue per available room is calculated as the percentage of
occupancy, multiplied by the average room price.
The volumes/margins ratio also takes into account the agreements with companies, which guarantee certain employment
rates by means of a pre-agreed discount scheme. Conventions also constitute an essential element of the hotel’s performance.
The evaluation - which considers performance together with perspective techniques of budgeting, - also takes into account
whether the hotel belongs to a hotel chain (often to an international one), which - among others - has an impact on the
level of brand awareness and reputation, as well as on customer loyalty. The evaluation of the hotel brand and any customer
satisfaction related information (e.g. through sites like Trip Advisor) are also taken into consideration in this context.
About the need to carry out a corporate assessment
The valuation of a hotel company may be appropriate or necessary, for example, in the following cases:
• the sale of the company or a branch of it (e.g. only the management, maintaining the “walls”);
• the sale of investments;
• exit / entry of a partner;
• extraordinary transactions (mergers, divisions, transfers, transformations);
• impairment test of the performance (for the hotels companies applying the IAS / IFRS);
• appropriateness of the rentals of business units and of the redemption price,
• as part of bankruptcy proceedings;
• hereditary divisions / donations;
• bankruptcy proceedings / arbitration proceedings;
• performance evaluation.
Evaluation methods of companies:
systematic classification
Here below we succinctly illustrate the different methodologies for assessing companies, partly in order to identify the
peculiarities related to hotel companies , related to each method. As to the research on the market value of a company, over
time both the most reliable theories and the practices have developed their generally accepted set of criteria and evaluation
methods applied (subject to the particular character of each estimate). The most known and most widely adopted methods
for evaluating companies can basically be divided into five different macro-groups:
• financial methods;
• income-based methods;
• equity-based methods;
• mixed methods of equity-income;
• sintetic methods (e.g. comparable transactions).
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