Audit of an Operating Hotel and Valuation of Hotel Real Estate

Buying, selling, or renovating a hotel without a professional audit is like playing financial russian roulette. ArtBuild Hospitality conducts comprehensive due diligence and independent valuations of hotel assets. We help owners see the true state of their business and help investors avoid buying a pig in a poke.

Service 1. Operational and Technical Audit

We conduct an in-depth analysis of business operations for two categories of clients:

for the seller/owner of a hotel business: to identify money leaks, optimize expenses, and prepare the property for sale or renovation;
for hotel business buyers: to assess risks prior to the transaction and understand the actual amount of necessary investments (CAPEX).

How does the process work?

Our experts not only review documents but also visit the property for an on-site inspection, followed by a desk-based analysis.

We evaluate three key areas:

the technical condition of the property: an inspection of the building’s condition, its physical infrastructure, utility systems, security systems, etc.;
operational efficiency: an analysis of the performance of all hotel departments, staffing schedules, and service standards;
commercial potential: an analysis of the wear and tear of the room inventory and financial statements.

As a result of the audit, you receive a Roadmap that includes:

a report on the actual condition of the asset;
recommendations for renovation and process optimization.

Optional:

a 10-year financial and economic model showing how revenues will change following the implementation of changes;
an analysis of compliance with international standards.

«We provide a comprehensive assessment of the hotel – from its physical infrastructure to its service standards. The owner receives not just a report, but a clear roadmap for renovation and a guarantee of the investment’s economic viability.»

Service 2. Hotel Property Valuation

A hotel is an operating business with complex cash flows. A standard real estate valuation does not apply here. ArtBuild Hospitality’s valuation takes into account specific hotel metrics: ADR, Occupancy, RevPAR, cost structure, and more. We use the income approach (DCF, Discounted Cash Flow) to determine the market value of the asset based on its ability to generate profit.

We conduct appraisals for:

purchasing/selling a property;
securing bank financing;
making decisions regarding mergers and acquisitions;
management accounting.

RICS Certification: We collaborate with leading appraisers who are members of the Royal Institution of Chartered Surveyors (RICS) – the world’s most authoritative organization in the real estate sector. This ensures that our report will be recognized by international banks and investors.

Our Case Studies

We have conducted comprehensive audits and provided asset management services for leaders in the Ukrainian hospitality market:

Rixos-Prykarpattya (Truskavets): comprehensive audit and asset management services for a diagnostic, medical, and rehabilitation resort complex.
Derenivska Kupil (Transcarpathia): comprehensive audit and development of a growth strategy for a recreational and wellness complex.