Market value may be defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
1While HVS has been performing feasibility studies and valuations in India for about 13 years now, 2009/10 was the first year when we worked on more valuations than feasibilities. We believe that this change in our business mix at HVS is representative of a very significant shift within the industry that has occurred in the past year and will become more prevalent in the future.
Historically, the Indian hospitality sector has seen very limited transactions, if any at all, of existing hotel assets. Also, hotels in India continue to be owned by developers for a long term unlike their counterparts in the US, where a certain property would routinely see change in ownership during its entire economic life.
Given the complications of identifying the right land parcel and acquiring control of it, obtaining the 70-110 licenses and approvals through multiple government agencies that are required for construction and opening, actually constructing the hotel within the projected time and budget, a developer who was able to cross all these hurdles and finally open the hotel was not very inclined to sell the asset.
Even if such discussions transpired, the asking price for operating hotels was significantly higher than the replacement cost for these hotels; thus, prospective investors simply chose to go through the entire development process and just build new hotels.
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www.hvs.com/article/4491/india-hotel-valuation-index-(hvi)-2010 1 -
Appraisal, 4th ed. (Chicago Appraisal Institute, 2002) Appraisal Institute, The Dictionary of Real Estate 
