What does going-concern value mean in my hotel appraisal?

It is the value of the hotel as an operating business, including real estate, FF&E and intangibles. The 2010 interagency guidelines define it as the value of a business entity rather than the real property.

Why did my appraiser split the value into real estate, FF&E and business value?

Because federally regulated lenders cannot treat going-concern value as the market value of the real property. The split lets the lender see what its mortgage actually secures.

Will my bank lend against the going-concern value or just the real estate?

That is set by the lender. Ask before the appraisal is ordered, because the answer can move proceeds by more than a million dollars on a mid-size hotel.

Is a broker opinion of value a going-concern value?

Yes. A BOV prices the hotel the way buyers do, as an operating business, from its NOI. See /hotel-valuation/broker-opinion-of-value.

Does going-concern value matter for property taxes?

Yes. Property tax applies to real property, so owners often appeal assessments that capture business or franchise value. Rules vary by state, so use a local property tax adviser.

GlossaryUpdated September 18, 2026

Going-Concern Value

Going-concern value is the value of a hotel as an operating business: real estate, furniture and equipment, and intangibles together. Federal appraisal guidelines dated December 2, 2010 say it may not stand in for market value of the real property.

By Nate Solomon, Hospitality Associate · Matthews Hotel Markets

The distinction matters most to a bank. Federal appraisal rules define market value as the most probable price a property should bring in a competitive and open market.^[2] The Interagency Appraisal and Evaluation Guidelines add that going-concern value, value in use, or a special value to a specific user may not be used as market value for a federally related transaction, though an appraisal may report them separately if they are clearly identified.^[1]

In practice a hotel appraisal for a bank often reports the going-concern total and then allocates it among real property, personal property and intangibles. The lender decides which figure its loan-to-value test runs against, and that choice is set by the lender. SBA treats hotels as limited or special purpose property, which is one reason a hotel 504 loan needs 15 percent down rather than 10.^[3]

The allocation also drives property tax appeals, depreciation schedules and transfer taxes. See LTV and BOV.

Worked example

Hypothetical. A hotel appraises at $12,000,000 as a going concern. The appraiser allocates $900,000 to FF&E and $1,100,000 to intangibles, leaving $12,000,000 - $900,000 - $1,100,000 = $10,000,000 of real property. At an assumed 65% LTV, a lender sizing to the going-concern total would lend $7,800,000. A lender sizing to real property alone would lend $6,500,000. Same hotel, same appraisal, $1,300,000 apart. Every figure here is an assumption for the arithmetic.

Common misconceptions

Going-concern value is not an inflated number. It is the right number for what a hotel buyer actually buys. It is only the wrong number for the real-property line in a bank file.
It is not the accounting term. Auditors use going concern to mean a business can keep operating. Appraisers use it to mean the value of the operating whole.
The allocation is not a formula. Appraisers use different methods to separate intangibles, and the results differ.

Frequently asked

What does going-concern value mean in my hotel appraisal?: It is the value of the hotel as an operating business, including real estate, FF&E and intangibles. The 2010 interagency guidelines define it as the value of a business entity rather than the real property.^[1]
Why did my appraiser split the value into real estate, FF&E and business value?: Because federally regulated lenders cannot treat going-concern value as the market value of the real property.^[1] The split lets the lender see what its mortgage actually secures.
Will my bank lend against the going-concern value or just the real estate?: That is set by the lender. Ask before the appraisal is ordered, because the answer can move proceeds by more than a million dollars on a mid-size hotel.
Is a broker opinion of value a going-concern value?: Yes. A BOV prices the hotel the way buyers do, as an operating business, from its NOI. See /hotel-valuation/broker-opinion-of-value.
Does going-concern value matter for property taxes?: Yes. Property tax applies to real property, so owners often appeal assessments that capture business or franchise value. Rules vary by state, so use a local property tax adviser.

Sources

Interagency Appraisal and Evaluation Guidelines, December 2, 2010 (SR 10-16 attachment) · Board of Governors of the Federal Reserve System, OCC, FDIC, OTS and NCUA
12 CFR 34.42, definitions (market value, appraisal) · Legal Information Institute, Cornell Law School
SOP 50 10 8, Lender and Development Company Loan Programs (effective June 1, 2025), Section C, Ch. 1: debenture limits (p. 350) and Limited or Special Purpose Property, which lists hotels (pp. 354-355) · U.S. Small Business Administration

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