Hotel valuation gap emerges around pest risk in new IHIF briefing
The report, titled The Valuation Blind Spot and published by Valpas, highlights that pest condition remains the only physical risk in hotel operations without standardised inspection protocols, certification requirements or recognised pricing mechanisms in transactions.
According to the findings, hotel assets experience an average of 7.1 bed bug infestations over a five-year period, with 70% of chemically treated cases requiring multiple interventions and 50% requiring retreatment within 12 months. Despite this, no hotel transactions currently include standardised pest condition data in due diligence processes.
The financial implications are significant. The report estimates that each incident in a luxury hotel carries a direct cost ranging between €32,000 and €95,000, excluding reputational impact. For a 200-room urban luxury property experiencing two incidents annually, the total exposure can reach between €27,000 and €160,000 per year, driven by operational disruption, room displacement, compensation and legal costs.
«Every hotel investor evaluates fire safety compliance, structural condition, and environmental performance before a transaction. Pest condition is the only physical risk where there is no data, no verification standard, and no pricing in the model. That’s a blind spot – and the market is beginning to correct it.” said Martim Gois, CEO and Co-founder of Valpas.
Vicky Karantzavelou