A Strategy for Estimating Identified Intangible Asset Value: Hotel Affiliation Contribution

Abstract

While there appears to be general agreement that a large portion of a hotel’s total intangible asset (TIA) value is derived from its brand or franchise affiliation, the value contribution from franchise affiliation can vary widely despite relative uniformity in hotel franchise fees among similar brands. Therefore, using a hotel’s franchise fees as the sole basis for estimating a hotel’s intangible value may not always be the most appropriate technique for estimating intangible value. This article presents a strategy for estimating a hotel’s intangible value by comparing the market value of the total assets of the business (MVTAB) and value allocated to identified intangible assets due to the affiliation (IIA a ) of two affiliated hotels in the same central business district, valued as of the same date. Both properties are affiliated with internationally known hotel companies, and they are direct competitors with one another. Having isolated the analysis for time differences, location, and market dissimilarities, comparison can be made of IIA a , which, as previously noted, are largely attributable to brand affiliation for hotel properties. It should also be noted, however, that other identified intangible