If there are no recent land comps for a ground up hotel transaction, is it acceptable/common to back into a ballpark sales price for the ground by knowing what a hotel will pay price/room and multiply this by the number of rooms they build for their prototype?

Any experienced advice or additional insight is appreciated.

It depends on what you are doing this for. Are you doing a bpo on a specific property,listing the land in question, scouting properties for a hotel developer etc.?

It's for a listing opportunity. The site is 4.78 acres rectangular and sits 500' off of an interstate at a signalized intersection. The interstate is the main artery into the neighboring state for commuter traffic and has a traffic count of 50,000 VPD. Additionally, there is a good amount of tourist, outdoors, and historical activities to definitely support a hotel. The MSA population count is 800,000. The property owner's rendering shows a 77 unit hotel, a 2,650 sf fast food pad, and 3,075 sf bank pad. Not sure if you need all this info, but wanted to paint the picture of the area.

You need to run a pro-forma on it. This is what a hotel developer will be looking at.

They will usually drive the area to find out the local competition. They will also want to know traffic flow during the day. Example 50,000 cpd but most of the traffic is on the other side of the street and no turn lane to get in on your side will be a big negative.

Are their other projects nearby that are commercial that will share cross-easements for roads that will get you some off traffic for the hotel?

The 4.78 what does the topography look like? How much of the parcel is usable to build on? In might be in a good area but if the land slopes a lot than land leveling and grading form the engineering report will be expensive.

What class of hotel that could go there will determine what average REVPAR could be obtained.

Is your property already zoned commercial OR is the area in land use corridor approved for it already? Are site plans already approved by the county,city?

The more legwork a landowner does the more they can get for their property as it takes less time and cost for the developer to get going with the project once they purchase plus it eliminates a lot of closing to contract due diligence time.


Is sewer close by and are sewer easement rights already granted so the developer can tap into without being held hostage by landowners close by?

To me the comps aren't other properties but a pro-forma based on what would be the lands highest and best use for the area base don current and future land use maps and zoning and current commercial mix existing already in the corridor.

Once you know that make up a few pro-formas on the top 2 uses that would go there and you will get an average list and anticipated sales price. You need to know expected cap averages for the area for that class usage to run the numbers.

Example if all the solds are based on 9 cap's pro-formas and your seller wants a 6 it's not going to happen.

Hope it helps. Buyers are purchasing just not a numbers from 2 to 3 years ago.

Thanks Super. Just an fyi - here are the answers to the questions you asked:

-Traffic flow during day? Don't have a number off hand, but the site is located on the main access road off the interstate to the downtown district. Anyone traveling on the interstate that works in town, has to travel on this road
- Other projects to share cross easements? None - the closest project is a new CVS anchored project I have listed a couple hundred yards just past this lot. Owner has approval to put in a signalized intersection in front of the site.
- Topography? flat
- Class hotel? Economy
- Zoning? Already zoned commercial & site plans have township approval
- Sewer? Yes, close by, and easement rights are in place.