A hotel is real estate, furniture and equipment, and an operating business, all under one roof and one sale price. Only the real estate is supposed to be taxed as real property. When an appraisal district values a hotel off total revenue, or off a comparable sale that itself blended all three components, the brand and the business end up taxed along with the building.
Brand value folded into the real estate
A flagged property under a national brand commands a rate premium the physical building alone doesn’t produce. That premium belongs to the franchise relationship, not the real estate, and a valuation that doesn’t separate the two overstates what the building itself is worth.
Furniture, fixtures and equipment counted as real property
Guest room furniture, kitchen equipment and other FF&E depreciate on a different schedule than the building and typically belong on a separate personal property rendition, not folded into the real estate value.
Revenue-based valuation applied without adjustment
Total hotel revenue includes room revenue, food and beverage, and other operating income that reflects the business, not the real estate. A district’s model that capitalizes total revenue without separating the business component out overstates the taxable value.
Comparable sales that carry the same blended value
A hotel sale price almost always includes the going concern — the brand, the operating agreements, the FF&E — not just the real estate. Using that price as a direct real-estate comparable, without adjustment, carries the same overstatement into the next assessment.
We review the property’s operating statements, franchise agreement and personal property rendition against the district’s valuation, and separate the real estate from the brand and business components before filing. Most cases settle at the informal stage. If they don’t, we present the case at the Appraisal Review Board (ARB) hearing, and if the board’s value is still too high, the appeal continues in district court or binding arbitration through Estes & Banks, P.C.
