HVS Offers Highest and Best Use Advisory Services for Troubled Assets

HVS offers customized consulting services to evaluate the highest and best use of your existing hotel asset.

When hotel owners default on loans or when hotels perform significantly worse than anticipated, lenders and equity investors may need to consider drastic changes. HVS hotel consulting specialists know how to apply the appraisal concepts of “Highest and Best Use” to your hotel property. In appraisal theory, the following four tests form the basis for determining the highest and best use of property:

  • Physically Possible
  • Legally Permissible
  • Financially Feasible
  • Maximally Productive

To determine a property’s highest and best use, each of these tests must be considered. Therefore, a thorough analysis of a troubled hotel’s true market value is likely to involve the evaluation of multiple scenarios, aimed at determining the property’s highest and best use. These scenarios may include changing the room count, the room mix, the amount of meeting space, the branding, the management, the amenities, and other aspects of a hotel property. Some scenarios could even involve demolishing the hotel, expanding the hotel, or converting the property to a totally different commercial use.

In recent months, clients have retained HVS to study whether existing properties in the following categories pass the tests of highest and best use:

  1. Hotel Water Parks
  2. Hotel Conference Centers
  3. Hotels Without National Branding
  4. Oversized Hotels
  5. Closed Hotels
  6. Negative Cash Flow Hotels

Our clients include investors, owners, operators, banks, other lenders, developers, lawyers, court-appointed receivers, and public agencies. HVS has more than 300 specialized hotel consultants, many of whom have extensive experience and training in highest and best use analysis. Please contact Hans Detlefsen at (312) 587-9900 or hdetlefsen@hvs.com for more information. Or contact a Managing Director at any of our 27 offices around the world to discuss your unique situation or to learn more about our past experiences.

HVS is a global consulting and services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. We are client driven and dedicated to providing the best advice and services in the industry. Please visit us at www.hvs.com to learn more about our company.

Hans Detlefsen, MPP
Managing Director
HVS Global Hospitality Services - Chicago
205 West Randolph, Suite 1650
Chicago, IL, 60606
Tel: +1 312 587-9900 ext. 15
Fax: +1 312 587-9908
Email: hdetlefsen@hvs.com
Profile: www.hvs.com/Personnel/Hans.Detlefsen.aspx