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Accommodation property assessments

Hotel/Motel properties

Hotel/Motel properties are considered accommodation properties for assessment purposes in Calgary. Accommodation properties are assessed annually as a non-residential property for taxation purposes. Assessment deems any property not used as a residence to be valued for assessment purposes as a non-residential property.

How accommodation property assessments are assessed

Assessed values for hotel and motel properties are predicated on the income approach to value. Each year The City of Calgary requests income and expense data from all hotel and motel operations. The information requested includes a summary of all sources of revenue as well as all departmental expenses, undistributed expenses and fixed expenses. The income and expense data requested from owners of accommodation properties for the 2014 roll correspond to the following dates:

Year 1: July 1, 2011 - June 30, 2012

Year 2: July 1, 2012 - June 30, 2013

Year 3: July 1, 2013 - June 30, 2014

 
The data reported from each property is stabilized using a weighting of 20 per cent for first year data, 30 per cent for second year data and 50 per cent for third year data. A net income based on the stabilized income of the property and typical expense ratios for the property is determined. The net income is adjusted to remove the business interest of the hotel creating a net income to real estate. The net income to real estate is capitalized to determine a final assessed value.

Three criteria that may affect value:

 

Location

Location is stratified by properties that are located within the downtown core or properties that are located outside of the downtown core.

Hotel performance

Occupancy rate: occupancy rates over the last three years are analyzed.

Revenue: revenues over the last three years are analyzed.

Expense ratios: expense ratios over the last three years are analyzed.

Type

The City uses the Province of Alberta - Municipal Affairs Hotel/Motel Valuation Guide to identify five category types for hotel properties. Values may differ between hotel types:

  1. Full service hotels - provide a variety of guest unit styles, meeting rooms, spacious public areas, and a wide variety of facilities including restaurants, lounges, fitness centres, pools, spas, business centres, shops and parking.
  2. Limited service hotels - are usually multi-storey establishments with interior entrances but contain fewer rooms than full service hotels. A variety of guest unit styles are offered, however, public areas including food and beverage facilities, pools and spas are usually limited.
  3. Motels - are usually one to three storey buildings with inside or outside entrances to the units which provide easy access to parking. The standard guest unit includes a sleeping room, bathroom and is similar in decor and design throughout. Public areas are limited in the size and the variety of facilities provided. It is common to have third party providers for food and beverage facilities that may be present.
  4. Strata/Condominium hotels* - units that are separate legal entities which may be owned individually or in bulk, can be vacation or business oriented, and are available to patrons either through a hotel chain or management company. Units vary in type from basic sleeping modules to one or more bedrooms, a living room, full kitchen and eating area.
  5. Beverage/Gallonage - hotels are generally older facilities originally constructed to satisfy minimum historic licensing requirements.

Valuation approach


Accommodation properties are typically assessed using the income approach to market value.

Value =  net income to real estate/capitalization rate

*The City of Calgary values Strata/Condominium hotels on the sales approach to value.

For more information on your assessment and/or on comparable assessments and on how to request this information, visit Assessment Search.