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Board affirms county's hotel assessment after debate over cap rates and market trends
Summary
After competing valuations from a hotel owner and county staff, the Arlington BOE confirmed the county's $35,161,600 2026 assessment for a 154‑key hotel, rejecting the appellant's lower valuation that used a higher cap rate and expense ratio.
The Arlington County Board of Equalization voted to confirm the county assessor's 2026 valuation of $35,161,600 for a 154‑room full‑service hotel in Arlington, after hearing rival analyses about market demand, cap rates and operating expenses.
Appellant presenter Mr. Kim said post‑pandemic declines in government and corporate travel had softened hotel demand in Arlington and Northern Virginia, producing lower occupancy, ADR and RevPAR trends. Using those market signals, Kim increased operating expenses to 72% and applied a 7.8% base cap rate to calculate an indicated value of $30,654,000 (about $199,000 per key). "Given these market and macro factors, we believe our requested assessment of $199,000 per key is more than warranted," Kim said.
County presenter Mr. Chas responded that commonly used cap‑rate surveys (RERC, PWC) showed tightening between third and fourth quarter 2025, supporting lower market cap rates and the county's higher assessed value. He said the county's projection was within a small range of 2025 performance and recommended confirming $35,161,600. "We do believe that the county should be confirmed at a value of 35,161,600," Chas told the board.
Board members debated whether the appellant's ban‑of‑investment calculations and local market data warranted raising the cap rate. Several members said the county's analysis and the recent fourth‑quarter data were sufficient and that there was not enough basis to change the county's cap‑rate assumptions. A motion to confirm the county's assessment carried with one member recorded as opposed.
The board confirmed the assessor's valuation at the hearing; no additional follow‑up or adjustments were announced.
