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By Hans Detlefsen and Todd Isenstadt


Economic life is an important component in determining development feasibility of hotels. Economic life is defined in the Appraisal Institute’s Dictionary of Real Estate Appraisal as “the period over which improvements to real property contribute to property value.” A deteriorating property can lead to a depreciation of the value of the asset, and owners of an aging property may determine that the expenses associated with improving the property cannot be justified. When improvements cease to contribute to value, the property’s economic life comes to an end.

The authors have collected data from approximately 150 economy tier hotel properties from across the United States to determine the average economic life of these properties. Outliers with an economic life of fifteen years or fewer were eliminated from our data set. This study considers only properties that were closed by normal wear and tear associated with age. Other reasons for the closing of properties that are not associated with normal wear and tear, such as natural disasters, have been excluded from our collection. Data on opening and closing dates of properties were gathered through the extensive HVS database of hospitality assets, STR participation lists, and interviews conducted by the authors.


We have determined that the average (arithmetic mean) economic life of an economy hotel property is as follows: 40.4 years. The median value is 39 years. The frequency distribution is presented in the figure below. The range of economic life, excluding properties that closed prior to sixteen years in operation, is reported on the horizontal axis. The vertical axis reports the number of properties within each period.

About HVS

HVS is the world’s leading consulting and services organization focused on the hotel, mixed-use, shared ownership, gaming, and leisure industries. Established in 1980, the company performs 4500+ assignments each year for hotel and real estate owners, operators, and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of more than 30 offices and 450 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry.

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HVS Chicago office specializes in hotel consulting and valuation. Our clients include investors, lenders, rating agencies, buyers, sellers, government agencies, tax assessors, operating companies, and owners.

About About the Authors

Todd Isenstadt
is an analyst at the HVS Chicago Office, where he specializes in hospitality industry research. Mr. Isenstadt graduated with honors from the College at the University of Chicago. He can be contacted by telephone at (312) 526-3782 or by email at

Hans Detlefsen, MPP, MAI is Managing Director of HVS’s Chicago office, specializing in hotel consulting and valuation. He holds a Masters Degree in Public Policy from the Harris School of Public Policy Studies at the University of Chicago, where he received the Harris Fellowship. He graduated magna cum laude from the University of Notre Dame with a Bachelor of Arts in Government and Economics. Mr. Detlefsen can be contacted by telephone at (312) 526-3885 or by email at

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