The O’Connor Approach vs The Rushmore Approach
The Rushmore Approach
Tax Assessors have over valued hotels for years by using the Rushmore Approach to value hotels. Rushmore believes by deducting franchise and management fees paid to franchisors, it has accounted for all intangible business value from the assessment. High courts in several states disagreed. Opinions issued by courts stated that “the manner in which the tax assessors applied the Rushmore method failed to account for economic Return on Investment because no rational investor would franchise their business to earn merely a Return of Investment. Adjustment to gross income for intangible value must be made prior to making the expense deductions.
The O’Connor Approach©
O’Connor acquires and collects ADR, Occupancy, RevPAR and Franchise Fees data from major publications, hotel associations and franchisors from every region. The incremental increase in revenue associated with the flag is electronically calculated. After deducting franchise fees, the Net Gain is intangible business value to be deducted from revenue to lower property taxes. The O’Connor Approach is copyright protected, used exclusively by O’Connor.
The O’Connor Approach is a game-changer for the Hotel Industry
