This paper was published in the Journal of Property Tax Assessment & Administration in 2016. It can be accessed through the IAAO Research Exchange.
Abstract:
This article proposes the cost approach as an alternative that avoids the pitfalls associated with income capitalization. It is a method that most assessors use every day. This article highlights the strengths of the cost approach in general, and then demonstrates the effectiveness of the cost approach in the valuation of lodging facilities. Using an operating hotel property, this article demonstrates that, for limited-market properties such as hotels, the cost approach is just as useful a valuation tool as the sales and income approaches and avoids the complexities and nebulousness involved in extracting enterprise value.