Valuation
What is the meaning / definition of Valuation in the hospitality industry?
The term Valuation describes the process of assessing a companyโs or assetโs economical worth. This is done by evaluating the structure of capital, market value of assets and prospects of future earnings. Often Valuations are required when a business owner wants to prepare their company for sale, ensure financial viability towards potential investors or to establish value of shares. Valuations are often done by accountants, asset managers, certified valuers, business advisors, real estate agents or merger and acquisitions specialists.
The value of a business relies on several points:
- Time concern โ Value in continued use as an ongoing operating business enterprise.
- Array of assets โ Value of assets in place but not used to conduct business operations.
- Orderly disposition โ Value of business assets in exchange, where the assets are to be disposed of individually and not used for business operations.
- Liquidation โ Value in exchange when business assets are to be disposed of in a forced liquidation
Below are several Valuation methods:
- DCF Analysis
- Precedent Transactions
- Comparable Analysis
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About the Author:
As CEO and Founder of XOTELS, Patrick Landman has made it his mission to turn hotels and resorts into local market leaders. XOTELSยด diverse expertise and deep-knowledge across revenue management consulting, hotel management, and hotel consulting, enables us to drive results for independent boutique hotels, luxury resorts, and innovative lodging concepts. Below you will find opinion articles written by Patrick Landman.