Lodging, or hospitality, covers a broad range of property types, says Richard Jander, MAI and Director of Hospitality Valuation with Valbridge Property Advisors | Houston. “It includes everything from a mom-and-pop motel or a B&B that’s got five rooms, to a multi-thousand-room casino. It’s a wide breadth of property types—limited service, select service, full service, convention centers, casinos… all of it.” In the appraisal industry since 2002, specializing in hospitality properties since 2008, Jander is a director with Valbridge’s Lodging and Gaming Team, a cadre of experts offering national coverage and specialty valuation services.

The variety of projects appeals to Jander, who enjoys the challenge and opportunity to solve problems for his clients. “I enjoy the fact that I get to help people address problems and fix things. Be it an owner trying to obtain a loan with the bank for an upcoming PIP,” says Jander, “or a developer wondering if the capital outlays on rebranding a hotel in a tertiary market are worth it.’”

“But for hospitality specifically,” he adds, “I like it because I’m a people person. I love talking to people, and most of your hotel people are by nature people people. Because that’s what they do. Their job is hospitality—to make someone’s stay or event as good as it can be.”

With hospitality, he adds, the key is: “What’s putting heads in beds?”

When solving the problem of value, Jander and the experts in the Lodging and Gaming Team analyze the subject’s client base and the trends that impact its occupancy and daily rental rates. Various factors might influence a property’s core clientele, including family vacations, corporate travel, location within town, or proximity to large transportation nodes, theme parks, or sports venues, to name a few.

“It’s not just saying, ‘Okay, they’ve got an occupancy.’” Jander says. It’s about asking, “‘Why are people staying at this property? Why are people not staying at this property?’” Providing this backstory in the appraisal not only provides a foundation for the valuation analysis but also can help the bank or owner see the subject’s weaknesses and opportunities.

While most property types involve lease terms of a year or more, hotels are rented out by the night, which can lead to high volatility, Jander notes. “You can get behind the eight ball quick. If you’re not paying attention, it’s lights out.”

Aside from having a database of current sales and expenses, Jander stresses the importance of regularly talking to owners and management companies to keep current in an ever-shifting market. Because of the volatility in this property type, keeping in touch with market participants is essential.

Though there is a lot of variability in the hospitality category—the types of properties, the levels of service offered, or the subject’s particular market and clientele—some properties stand out for reasons of their own.

“One of the ones I’m working on now,” Jander says, “is predominately in the floodplain and partially in the floodway.” Between this and other odd factors, he found it particularly interesting from a problem-solving perspective. “It’s not glamorous,” he says, “but it’s still one of those ones that is memorable in the fact that it required me to truly knock the rust off a few gears that haven’t been used in a while and understand the various components of value as they pertain to this property.”

Sometimes a subject’s history or development will stand out. Jander recalled a bed and breakfast in Galveston, Texas, now known as The George Manor, was a particularly memorable property for him. Built in the 1850s, it was expanded in the 1860s by Edward T. Austin, a relative of Stephen F. Austin, who is known as the “Father of Texas.” Though the property had fallen into disrepair, its most recent owner, Graham George, has worked to restore to its former glory. An art enthusiast, George even coordinated the restoration of the home’s original frescoes. For Jander, the level of detail in the restoration, the artwork that adorned its walls, and the history behind the property made this a particularly interesting project.

Jander noted one property, with a much shorter history, that he first appraised for a continuation loan while it was in development. A year and a half after it had been finished, Jander re-appraised the property for a sale. The hotel had been underperforming, and when Jander spoke with the buyer, he said he was aware of this, but he was buying the property at less than it would cost him to build one. “That was in 2019. And costs have gone crazy since then. This guy’s crystal ball was working that day,” Jander laughed. “So now the property is performing, he’s got some new clients coming in, he’s found some new demand, and it’s just fun to see that property get to where it should have been from the beginning.”

The Houston office’s summer interns also got to see a property Jander appraised—a hotel with history and pizzazz. Hotel Emma in San Antonio was a former brewery redeveloped “to the nines,” says Jander. “I’ve never seen anything like it.” Its occupancy was barely dinted by the pandemic, Jander added, even though their room rates remained unchanged. The interns visited the hotel as part of their last hoorah to wrap up the summer, he added, where they got to have a tour by the owner.