Image of the City of Regina

Motel A



Appraisal Cycle Date – January 1, 2017 to December 31, 2020

Effective Date of Valuation – January 1, 2015

Date of Report – July 26, 2016

Model Summary


Net Income per Room

Occupancy Rate

Overall Capitalization Rate

Hotel A




Hotel B




Hotel C – Year Built 1999+




Hotel C – Year Built Pre-1999




Motel A






The Hotel/Motel model is an income model that values all of the hotel and motel properties in Regina.  Hotel and motel properties that also include separate office, retail and/or restaurant components have these components valued by the Office and Commercial models.  The Hotel/Motel model is a city-wide model in application.

Hotel/motel properties are classified and grouped according to generally accepted Accommodation Industry practices, including motels, limited service hotels, select service hotels, and full service motels, among others.  These are generalized definitions; a hotel/motel property may not meet an exact definition, but is placed in the classification that best fits the individual property.

After analyzing all available market information, the Assessor determined the following categories of hotel/motel properties noted in the Model Summary on the previous page.  These categories are described as:

  • Full Service – Hotel A and Hotel B
    • Conference capable facilities offering full food and beverage services for guests and groups; abundant meeting and banquet space to accommodate large groups and conferences
    • The Hotel A model values the two premier full service hotels in the City’s downtown core; the Hotel B model values the remaining full service hotels in the city
  • Select Service – Select Service
    • Non-conference capable facilities offering a select number of services and amenities; limited meeting space for small groups
    • The Hotel C model is stratified into two sub-models based on year built
  • Motel – Motel A
    • 2-storey, walk-up style motels offering minimal services and amenities


Zoning Descriptions

The Hotel/Motel model is a city-wide model in application.  The majority of the properties valued by this model are located in East Regina along the Victoria Avenue corridor, in the downtown central business district of Regina, and in South Regina along Albert Street.  The remainder are scattered throughout the middle sections of Victoria Avenue and Albert Street, in Southwest Regina in the Harbour Landing Area, and at the very north end of the city at Pasqua Street and Highway #11.

All of these properties are located on commercially-zoned land with various zoning classifications depending on location.  The majority of the downtown core properties are zoned D (Downtown) whereas all other properties are zoned MAC (Major Arterial Commercial), except for a few properties zoned HC (Highway Commercial) along the East Victoria corridor and at the north end of Pasqua Street.



Highest and Best Use Analysis

Saskatchewan assessment legislation, through its municipal Acts and Regulations, require the Assessor to value all improvements that exist, whether or not the improvement is complete or capable of being used for its intended purpose.  In the vast majority of instances, the present improved use of a property represents its highest and best use and the Assessor will value it according to its present use.  If market information indicates that such is not the case for a particular property, then that property’s highest and best use is changed and the property is valued accordingly.

For a detailed discussion on Highest and Best Use, please see the Introduction document.


Valuation Approach

All three approaches to value (cost, sales comparison and income) can be used to value hotel/motel properties.

The Income Approach to Value is warranted and preferred when sufficient income, expense and sales data is available for analysis.  The Income Approach is based on the premise that the value of an income-producing property is related to its potential income-producing capability.

Based on the availability, quantity and quality of market data regarding hotel/motel net incomes and sales to produce overall capitalization rates, the Income Approach to Value is used in the Hotel/Motel model to value these properties for assessment purposes.



Hotel/Motel Model

Net Income Model Development

Prior to 2015, the City Assessor requested copies of financial statements for the base date and prior three years for all hotel and motel properties.  The data for the development of the mass appraisal net income model came from these returned financial statements.  All three years of data (2012, 2013 and 2014) were analyzed to understand valuation trends in the marketplace; the final model is based upon 2014 data.

The financial statements of 23 hotel/motel properties were analyzed. The net income model is an additive model that predicts net incomes based on the number of rooms and the typical net rent per room.

The development of typical hotel/motel net incomes is a three-step process:

  1. Develop net incomes from individual hotel/motel properties
  2. Develop potential net income per room from individual hotel/motel properties
  3. Develop typical net incomes per room for different hotel/motel property groups

The first step in the development of hotel/motel net incomes is to review the revenue and expense statements for each individual hotel/motel property that provided information.  The net income for each individual property is derived through the following formula:

Operating Revenue – Departmental Expenses – Undistributed Operating Expenses – Fixed Expenses = Net Income

The second step is to develop the potential net income per room from the total net income for each individual property.  This process considers the occupancy rate of the individual hotel/motel property and its number of rooms to determine the potential income the individual property could earn if it was fully occupied, as follows:

Net Income ÷ Occupancy Rate ÷ Number of Rooms = Potential Net Income per Room

The third and final step of developing typical hotel/motel net incomes is to analyse the various individual properties to determine if different typical potential net incomes and occupancy rates are applicable to different groups or classifications of hotel/motel properties.  These typical figures will be required in the application of the net income model to the inventory of hotel/motel properties in the city.  The following hypothetical example illustrates this process of developing typical figures:


Hotel X

Hotel Y

Hotel Z



Actual Potential Net Income per Room





Actual Occupancy Rate






Rent Model Application

The second step in the valuation process is to apply the typical potential net incomes and occupancy rates against the hotel/motel inventory in the city to arrive at typical total net incomes for all hotel/motel properties.  Please see the following hypothetical example: 


Hotel X

Hotel Y

Hotel Z

Typical Potential Net Income per Room




x Number of Rooms




= Potential Net Income




x Typical Occupancy Rate




= Effective Net Income





Overall Capitalization Rates and Adjustments

Economic Capitalization Rates were estimated by dividing the predicted base date net operating income (generated from the net income model) by adjusted sale prices.  Sales used in this analysis occurred between January 1, 2011 and December 31, 2014.  These sales were verified by mailing questionnaires to both vendors and purchasers.

Land Titles information and the Assessor’s verification process both showed that the sale prices of these properties excluded amounts for furniture, fixtures and equipment (FF&E).  The sale prices reflected in the table below reflect the sale of land and buildings only.  Therefore, adjustments for FF&E are not required in this valuation model and calculations.

The capitalization rate analysis involved four sales, detailed in the following table:

Application of Capitalization Rate

The final step in the valuation process is to capitalize a property’s net income to determine its total value.  Continuing the hypothetical example used above yields the following:


Hotel X

Hotel Y

Hotel Z

Effective Net Income




÷ Capitalization Rate                                      




= Assessed Value of Real Estate






In mass appraisal, the most effective means of evaluating the accuracy of appraisals is a ratio study.  A ratio study compares the appraised values produced by the valuation models to arm’s length sale transactions in the marketplace.

The legislated statistical requirement governing the assessment of commercial properties in Saskatchewan is for the median ratio of a city-wide assessment-to-sale study to be within the range of 0.95 to 1.05.

The median assessment-to-sale ratio and Coefficient of Dispersion for this model is provided below:

Number of Sales                                        4

Median Assessment-to-Sales Ratio (ASR)     1.000

Coefficient of Dispersion (COD)                   4.1%