Inn Consultants and Brokers Since 1993

Rick Wolf and Peter Scherman (that’s Rick on the left and Peter on the right) are both experienced speakers who have presented on a range of innkeeping related topics at the state, regional, and national level. They gather and analyze research for the Innkeeping industry and welcome the opportunity to share it with others. Contact Us

The B&B Team
 

Real Estate Terms: Good Will

by Peter Scherman of The B&B Team

What exactly is “good will?” Good will is what is known as intangible personal property that is part of a business. With an inn, as we discuss in the article, “The Components of Inn Value,” the base value is real estate. On top of that you have FF&E (furniture, fixtures, and equipment, or tangible personal property). Tangible property can usually be valued fairly objectively. However, often times a business property is transferred at a price that exceeds the sum of the physical parts. The difference is good will.

Good will is the price a person is willing to pay for a business’s marketplace presence (that would otherwise take time to establish), a guest or customer base and list, a good reputation, a track record, good staff and management, and, because of these things, the ability to generate a reliable stream of income.

You can’t see good will, but you can measure it by the price a person pays for it. And the IRS treats it as depreciable property, so you know it’s real!

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