Hotel Valuations: Why Your Appraiser Sounds Like a Robot

Bridging the divide between financial reporting and the appraisal world

There is a recurring moment of quiet frustration in nearly every audit cycle: the valuation report arrives – neatly packaged, meticulously worded – yet somehow not useful. Not entirely.

You examine it, searching for alignment with financial reporting needs – inputs tied to the client’s forecast, assumptions that integrate with your models, rationale that aligns with ASC 820 definitions. Instead, you encounter a sterile narrative that seems to speak an entirely different language.

You request a revision – perhaps a minor rephrasing or a narrower range. The appraiser declines.

Not because they cannot, but because they will not.

And if you are fortunate, they will cite USPAP as the reason.

The appraisal machine

Appraisers are not intentionally being difficult. They are following what they were trained to do: a structured framework of standards, templates, and rules that are ingrained in their professional identity.

To be fair, their caution is warranted. Straying from the Uniform Standards of Professional Appraisal Practice (USPAP) or the Appraisal Institute’s guidance can jeopardize licenses, reputations, and liability coverage.

Yet, this adherence to formality often fosters an industrialized mindset: complete the assignment, follow the format, document every detail, avoid interpretation. It is a culture designed for compliance rather than collaboration.

The challenge? Financial reporting is not a rules-based environment – it is a judgment-based one.

Auditors live in the gray

Financial reporting experts and auditors face a different kind of pressure. They must navigate complex standards involving nuance, management input, forward-looking assumptions, and interpretations of market participant behaviour. They do not just need “a value” – they require a defensible narrative, with inputs that reconcile to models and disclosures capable of withstanding review.

In this environment, valuation is not a box-checking exercise; it is a critical part of the financial engine. It influences goodwill impairment testing, acquisition accounting, real estate allocations, internal controls, and audit committee communications. It must align seamlessly.

This is why many financial reporting teams feel they are handed a final product they neither influenced nor can fully utilize.

A culture clash, not merely a communication gap

The issue is not that appraisers are “wrong,” but that many operate in isolation. Their experience often lies in market-facing valuations for lenders, tax assessors, or courts – not for financial statements. They know their playbook, but they do not speak the language of accounting professionals.

There is also a cultural pride within the appraisal profession that resists flexibility. Terms like “independence” and “objectivity” are often wielded as shields, dismissing collaboration as bias. Yet independence and cooperation are not mutually exclusive.

Here is the truth: if an appraiser is valuing assets for financial reporting purposes but does not understand what an auditor needs – then they are not fully meeting the requirements of the assignment.

Example: When it works

Consider a more effective approach.

Crowe, a respected and forward-thinking accounting firm, often manages high-stakes financial reporting assignments where clarity, timing, and defensibility are paramount. In one instance, a Crowe team evaluating a portfolio of hospitality assets under ASC 805 purchase accounting engaged a third-party appraiser whom Horwath HTL recommended with strong real estate credentials and a technical accounting background.

The impact was immediate. This appraiser did not simply hand over a report – they participated in working sessions, asked questions about management inputs, ensured valuation assumptions tied into the audit narrative, and proactively addressed intangible asset components affecting deferred tax treatment. They anticipated ASC 820 Level classification concerns. They even annotated assumptions directly into the Excel model, allowing the Crowe audit team to review and sign off with confidence.

This was not a mechanical handoff – it was a partnership. And it made all the difference.

Role-Play: When it does not work

Audit Manager (to Appraiser): “Can you align your stabilized cash flows to the board-approved forecast? The current model does not reconcile with the documents we have reviewed.”

Appraiser: “I understand, but my role is to reflect market participant behaviour – not management’s perspective. My income approach is based on a proprietary survey and cannot be altered.”

Audit Manager: “Even if that means contradicting every internal document the client uses?”

Appraiser: “I am obligated to remain independent. Their forecast is theirs. The market is mine.”

Result: A stalemate.

The issue is not differing opinions – the appraiser may be correct, or they may not be. The real challenge arises when valuation results are delivered without meaningful dialogue, making it nearly impossible for the audit team to fully understand the underlying rationale. The client’s forecast is not merely a formality; it is a key data point that should be evaluated, tested, and either incorporated or explicitly rejected based on market evidence.

This “newspaper delivery” approach – where a report is dropped at the doorstep with no engagement – does not work in the world of financial reporting. Audits are complex, interpretive, and iterative. When valuation professionals disengage after delivering a PDF, audit teams are left to fill in gaps, defend assumptions they never agreed upon, and explain conclusions they never had the opportunity to discuss.

A genuinely integrated process requires early involvement, ongoing dialogue, and recognition that effective valuation is as much conversational as it is technical.

The right kind of appraiser makes all the difference

Having “a valuation” is not enough – you need the right valuation professional, someone who understands both the rigor of the appraisal world and the interpretive, judgment-based nature of financial reporting.

The best appraisers are not simply technicians. They have experience within accounting functions. They have participated in audit meetings. They understand why ASC 805 versus ASC 360 matters, and how goodwill persists on the balance sheet.

They do not challenge every assumption; they discuss it. They may not rewrite their framework to match the audit, but they explain how their conclusions support it. They provide defensible logic, Excel workpapers, and, when necessary, revised narratives that bridge the gap—without compromising ethics.

They are rare, but when you find them, they are invaluable.

Building the bridge

It is time to stop treating appraisal as a commodity. A valuation is not just a document – it is a dialogue, one built on judgment, trust, and alignment.

If you are a financial reporting professional, seek appraisers who ask questions early, who remain engaged, and who understand that in your world, numbers are only as strong as the story they support.

And if you are an appraiser, recognize that your greatest value is not just in compliance. It lies in your ability to communicate effectively with those you serve.

Because ultimately, the best valuation professionals are not just credentialed – they are connected.

Bryan Younge – Managing Partner at Horwath HTL. Connect with Bryan on LinkedIn.

This article originally appeared on Horwath HTL.