The course will provide a practical understanding of fundamental global hospitality (hotel and restaurants) real estate finance and development principles and practices by:
· Introducing students to methods for estimating, calculating, and analyzing basic real estate measures of return;
· Introducing students to investment techniques in hospitality industry
· Having students understand the relative importance of these measures of return and the underlying reasons for their importance;
· Enabling students to recognize the varied financial and non-financial objectives of the key private and public sector participants in the global hospitality real estate development process;
· Familiarizing students with the key components of the real estate development process and the sequencing, relative importance, and interrelationships among these elements; and
· Establishing an analytical framework to evaluate the risks and rewards of existing and proposed real estate projects from both a quantitative and qualitative perspective to determine a project’s value.
COURSE DESCRIPTION
This course is designed for students interested in understanding the fundamentals of global hospitality real estate finance and development. A variety of real estate asset types (e.g., conventional and mixed-income housing, office, retail, hospitality, mixed-use, and land) will be used as vehicles to illustrate basic real estate finance and development principles and practices. Students will learn how to identify, understand, and calculate the three basic financial rewards generated by successful income-producing real estate projects: cash flow, tax benefits, and future benefits. Students will also be exposed to the financial risks associated with real estate development and investment and the methods commonly used to mitigate perceived risks. Based upon this understanding of basic risk and reward components, students will proceed to construct simple "After-Tax Cash Flow" income statements incorporating a project‘s revenue stream, operating expenses, replacement reserves, debt service requirements, amortization and depreciation schedules, and federal tax requirements.
