The Quality Inn Auckland comprises a $200-$room $4-$star hotel located within Auckland CBD$.$ The property is a limited$-$service offering with rooms only and no food and beverage

or other facilities. The hotel is operated under a management agreement with a major international operator for $15$ years.

The hotel is forecast to achieve an Average Daily Rate $($ADR$)$ of $$175$ in the coming year at an occupancy rate of $75\%$ and a Net Operating Income $($NOI$)$ margin of $33\%$ of gross

revenue.

Recent transactional evidence suggests that yields for freehold going concern hotels within Auckland CBD are $7\mathrm{.}0\%,$ market rents are approximately $$12,500$ per room per

annum, and the sale price per room of comparable properties was between $$200,000$ and $$230,000.$

Utilising the Capitalisation of Income Approach, what is the Freehold Going Concern Value of the Hotel? $($Assuming payment in arrears$)$

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