Property Valuation
A Colorado appraiser valuing a hotel would most likely use which approach as primary?
AA. Sales comparison, using residential sales
BB. Income approach (direct capitalization or DCF), since the hotel's value is directly tied to its income-producing capacity✓ Correct
CC. Cost approach alone
DD. GRM method using residential rents
Explanation
Hotels are income-producing properties, and their value is primarily driven by their ability to generate income (room revenue, food and beverage). The income approach — using capitalization or DCF analysis of the hotel's income stream — is the most appropriate primary approach. Comparable hotel sales may be used to corroborate. The cost approach may also be used for insurance or new properties.
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