Comments on "A Strategy for Estimating Identified Intangible Asset Value: Hotel Affiliation Contribution" (Letters to the Editor) (Letter to the Editor‪)‬

I commend John W. O'Neill, PhD, MAI, and Eric E. Belfrage, MAI, for the deliberate approach that they employed in arguing their position in "A Strategy for Estimating Identified Intangible Asset Value: Hotel Affiliation Contribution" (Winter 2005). However, I find the quantity of assumptions and the subjectivity regarding these assumptions troublesome. At least five major assumptions are used by the authors to estimate the value of the hotel intangibles. These include: (1) the proper items in the intangibles category to measure (in this case, only "identified intangible assets due to affiliation"); (2) the revenue stream generated by brand affiliation; (5) the proper flow-through rate to establish the proportion of brand affiliation revenue that flows through to net operating income; (4) the proper percentage to assign to each major asset category within the band-of-investment capitalization methodology; and (5) the proper capitalization rate to assign to real estate and to personal property in solving for the intangibles capitalization rate as extrapolated from the total rate estimated for the overall business enterprise.