The Quality Inn Auckland comprises a $200$ room $4-$star hotel located within Auckland CBD$.$ The property is of 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 previous year trading metrics and

market conditions forecast are presented below

Previous $12$ months trading metrics

Market ADR: $$160$

Subject hotel ADR: $$176$

Market occupancy: $,80\mathrm{.}00\%$

Subject hotel occupancy: $,75\mathrm{.}00\%$

Net operating income $($NOI$)$ margin: $,33\mathrm{.}00\%$ of Gross Revenue

Market conditions:

Market ADR $($yr$.1$ forecast$)$: $,$$$165$

Market occupancy $($yr$.1$ forecast$)$: $,83\mathrm{.}00\%$

Market yields for freehold going concern hotels: $7\mathrm{.}00\%$

Discount rate $,7\mathrm{.}50\%$

Terminal yield $,8\mathrm{.}00\%$

Net operating income $($NOI$)$ increase: $,3\mathrm{.}50\%$ per annum compounding

Market rents: $$12,500$ per room per annum

Price per room for comparable properties: $$215,000-$ $$240,000$

Clearly stating any additional assumptions you consider it necessary to make, demonstrate in the text field below how the freehold going concern value of the above hotel can be

estimated using appropriate valuation methodology.

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