The blind spot in valuation | News
As IHIF EMEA 2026 convenes under the theme Returns Redefined, Value Reimagined, a new briefing published by Valpas exposes a structural gap in the way hotel assets are valued: every physical condition risk in a hotel – structural integrity, fire safety, water quality, HVAC performance – has a standardized inspection, a certification requirement and a recognized impact on transaction value. Every risk except one.
Bed bug risk has traditionally been an unpredictable operational cost in facility budgets: invisible in due diligence, unquantifiable in underwriting, and absent from ESG reporting. The briefing – titled The Valuation Blind Spot – maps the regulatory, technological and market forces that are converging to close this gap, and examines what the evidence from Paris and other early-stage adopter markets reveals about how quickly the shift is happening.
The plagues have become structural and not temporary
Industry data paints a picture that should concern anyone conducting due diligence on hotel assets. Hotels have an average of 7.1 bed bug infestations every five years. Seventy percent of chemically treated pests require multiple rounds of treatment to resolve. Fifty percent require retreatment within twelve months. At the same time, EU regulations are tightening restrictions on neonicotinoid-based pesticides – the chemicals underlying the most reactive treatment. The upcoming revision of the EU Ecolabel by the European Commission will formally distinguish between reactive biocide treatments and verified prevention-based systems.
The reactive model is not only ineffective, it is also becoming unviable. For a 200-room urban luxury hotel that experiences two incidents per year, the annual profit-and-loss exposure is between €27,000 and €160,000 in direct costs (room relocation, treatment, handling of legal claims, compensation, operational disruption) before reputational damage. As treatment options narrow, this figure is likely to escalate rather than stabilize.
“Every hotel investor evaluates fire safety compliance, structural condition and environmental performance before a transaction. Pests are the only physical risk when there is no data, no verification standard and no pricing in the model. That’s a blind spot – and the market is starting to correct it.” — Martim Gois, CEO and co-founder, Valpas
How the economy is changing: from income statement volatility to balance sheet infrastructure
The briefing describes how ongoing security infrastructure changes when pest-related costs enter the financial structure of a hotel asset. Under the reactive model, any contagion results in unpredictable operating expenses that flow directly through the income statement, unpredictably depressing NOI and compounding the entire portfolio. Permanent infrastructure replaces this with a fixed annual liability per room that is eligible for capitalization as an asset enhancement: costs move from OPEX to the balance sheet, NOI stabilizes and the asset has documented permanent security supporting favorable underwriting terms.
For operators, the shift is immediate: unpredictable costs that erode gross operating profit – emergency treatments, room blocks, guest compensation and the reputational damage that quietly compresses ADR – are being replaced by an established safety infrastructure. For owners, the improvement flows through to NOI and supports the pricing of the asset in a transaction or refinance.
Reputational damage has become permanent and algorithmic
The briefing documents how a single unattended incident now generates a rating signal that lasts indefinitely on any platform and surfaces guest feedback. AI booking agents and travel assistants – trained on structured, verifiable data – are already making recommendations on behalf of business and leisure travelers. A hotel without verified permanent security is a hotel that these systems cannot recommend with certainty. At the same time, business travel executives are formalizing safety and duty of care requirements: GBTA data shows that safety concerns among corporate travel professionals are at 46%, up nine percentage points year-over-year. Verifiable permanent security meets RFP criteria.
The ESG gap becomes verifiable
Hotels are among the largest indoor users of neonicotinoid-based pesticides – the same class of chemicals linked to the collapse of pollinator populations worldwide, and which is 7,000 times more toxic to bees than DDT. As CSRD mandates are expanded in 2026 and audited ESG information becomes mandatory, the gap between published sustainability commitments and actual use of chemical pesticides will become verifiable. Permanent safety infrastructure seals it off: no pesticides, real-time verification, 1.4 tonnes of CO₂e reduction per room per year compared to reactive chemical cycles, and full alignment with GRESB, BREEAM, LEED, EU Ecolabel, GSTC, Travalyst and WSHA frameworks.
Paris moved in less than eighteen months
The briefing presents Paris as the clearest evidence of the speed of adoption. Following the 2023 bedbug crisis, the luxury market has evolved through three levels of adoption in less than eighteen months – from global brand size (Marriott Rive Gauche, 757 rooms, owned by Aroundtown) through branded boutique luxury (Prince de Galles, 159 rooms) to ultra-boutique independents. The pattern is consistent: once a visible brand in a market certifies, demand for peer properties shifts to or from when.
What investment professionals are starting to wonder
The briefing concludes with a due diligence framework that leading investment professionals are beginning to apply to current hotel transactions:
1. Request real-time certification of pest conditions or verified ongoing safety documentation.
2. Request the log of pest control interventions for the past 24 months.
3. If no verified evidence exists, consider discounting for structural recurring cost risk, capital investments to install permanent infrastructure and reputational exposure.
4. Benchmark against comparable certified assets on the market to quantify the valuation difference.
“The question isn’t whether this standard will happen. The question is whether the assets in a given portfolio lead or adapt to it later – and what the valuation difference looks like by the time they reach that.” — Martim Gois, CEO and co-founder, Valpas
