Correspondence: Leonard A. Jackson, Rosen College of Hospitality Management, University of Central Florida, Orlando, FL, USA. Tel: +407 903 8154; Fax: +407 903 8105; E-mail: lajackso@mail.ucf.edu

¹teaches at the Rosen College of Hospitality Management in Orlando, Florida. Throughout his 20-year career, Dr Jackson has held senior managerial positions with leading hospitality enterprises. These include hotels, resorts, free-standing restaurants and a national airline. He received his doctorate degree from Oklahoma State University, USA, Master's from the University of Guelph, Canada, Bachelor's from Ryerson University, Canada and Associate of Arts degrees from George Brown College, Canada. Dr Jackson is a Certified Hospitality Accountant Executive (CHAE), Certified Hospitality Revenue Manager (CHRM), Certified Hospitality Technology Professional (CHTP) and Certified Hospitality Educator (CHE). He also earned a certificate in Revenue Management from Cornell University. Dr Jackson focuses his research in the areas of hotel development, lodging operations management, lodging real estate investment trusts (REITs), hospitality accounting, hospitality finance, information technology and asset management.

Received 24 February 2008; Revised 24 February 2008; Published online 11 June 2008.

Abstract

Lodging enterprises use a mix of approaches to estimate the value of their real property. Some approaches are formal, comprising theories and models while others are informal, operating by ad hoc rules of thumb. There is a wide variation and complexity between each valuation technique, with each offering benefits as well as limitations. While there are many approaches to valuating hospitality enterprises, three approaches are generally utilised to determine the value of lodging properties. These include the cost approach, the sales comparison approach and the income capitalisation approach. This paper presents an overview of the common valuation methods used in determining the value of hotels. The paper uses hypothetical data to illustrate the application of the income approach and the direct comparison approach.