Every franchise hotel owner will agree that a large portion of their revenue is due to the flag under which they operate. Whether it be because of people booking reservations on the flag’s home website, franchise award programs, franchise brand marketing, or just people staying at the hotel because of the certainty the flag provides to its clients, clients look for brand names they can trust. This added value is an intangible that increases the revenue produced by the franchise hotel compared to a comparable independent hotel. Texas law does not allow the appraisal districts to include the valuation of intangibles in the total market value. Therefore, this intangible franchise value must be reduced from the total market value of the hotel itself. A major issue has been how to calculate this value. In my experience in the hospitality market and just driving up and down any major corridor, it is obvious that independent hotels are becoming a thing of the past. There are fewer quality, independent hotels across the state and nationally. This problem adds to the difficulty in calculating the franchise value, but at the same time, proves that this intangible value does exist.
Please feel free to contact me if you would like to discuss this or any other property tax issue.
Niral Gandhi
