A multi-million dollar hotelier based in the Midwest engaged personnel of Swartz + Associates, Inc. to review the real property assessments for their locations across the country, based upon the economic turndown and lagging revenue per available room.
In particular, the client needed representation on a hotel that had undergone significant changes due to a change in flag.
With this change, significant leasehold improvements were necessary, including remodeling of the lobby area; reconfiguration of the rooms and room sizes; change in the reservation system and upgrade of personal property associated with each room.
Once the property tax specialists at Swartz + Associates, Inc. reviewed the changes and expenditures associated with the conversion, an appeal was filed to protest the current valuation. We discovered the county model had increased the estimated room rate revenue based upon the brand name and estimated significant increases in non room revenue such as restaurant income and vending machine income.
We initiated a walk-thru of the facility with the county, to show that due to the reconstruction associated with the flag change, the number of rooms actually decreased. Additionally, expenses were greater because of the increase in quality associated with bedding, linens, televisions and other room furniture. Finally room revenue calculations were estimated by the county based upon “rack rates” and not on actual revenue
To date, total tax savings to the client has exceeded $200,000 and Swartz + Associates, Inc. will continue to monitor the valuation annually due to foreseeable stagnation in the hotel industry.