we are frequently asked whether hotels or offices are a better recovery option. Many investors expect a flood of hotels to come on the market at very low selling prices and at higher yields as the financial crisis unfolds. While every investment opportunity must be examined on its own merits, it is instructive to compare hotels and offices generally – from an investment point of view. In essence, all commercial properties are valued based on the same factors, their ability to generate future cash flows to the investor. The main difference between hotels and offices is that hotels are considered trading assets, i.e. the future cash flows depend on the efficiency of the business located in the building. In this article we will look at how investors evaluate this inherent business risk. In commercial real estate this risk assessment is often described by the required return on investment, or the yield. We will appraise how the investment market perceives this risk, versus the main benchmark asset class, prime offices.