Hotel Model

Revenue is built from the rooms department outward. Available room nights equal total keys times days in the year.

• Rooms sold follow from applying an occupancy rate that ramps before stabilising, and rooms revenue is rooms sold times ADR. RevPAR, the headline valuation metric, is simply occupancy times ADR, or rooms revenue divided by available room nights.
• Growth comes from ADR pricing, occupancy through loyalty channels and suite mix.
• F&B and spa revenue both scale with rooms sold rather than available rooms, each using a per-occupied-room spend figure that grows at its own rate, so occupancy drives ancillary spend while ADR increases do not lift it proportionally. Other operated departments, covering parking, retail and similar, are modelled as a percentage of rooms revenue.

Occupancy, ADR strata and seasonality feed the blended ADR, and a checks row confirms the seasonal mix sums to one.

Costs follow USALI sequencing: departmental expenses first, then undistributed overheads, then management fees and fixed charges. Departmental costs vary with their own revenue line, so each department carries its own margin.

• Channel costs, covering OTA and brand commissions, are deducted within the rooms cost block based on the booking mix across OTA, brand and direct channels. Rooms costs scale with rooms sold, not available rooms, which matters for housekeeping and guest supplies.
• Undistributed opex, covering admin, sales and marketing, property operations and utilities, splits each line into a fixed base escalated by cost inflation plus a variable share of revenue. That split is the source of operating leverage: as revenue outgrows the inflated fixed base, margins expand, and in a downside case where revenue grows slower and inflation runs higher, margins compress.

Management fees, a base fee, an FF&E reserve and a two-tier incentive fee sit on GOP, with the incentive tier floored at zero.

The P&L consolidates the departmental build into GOP, then subtracts base and incentive management fees, property taxes and insurance, and the FF&E reserve to reach NOI. Depreciation is tracked separately, so operating cash flow starts from NOI, which is already pre-depreciation, and no add-back is applied.

• This avoids double-counting D&A, which is a known cause of balance sheet errors in hotel models.
• The cash flow layer runs a liquidity waterfall. A minimum cash balance, roughly two months of opex, is held every year.

In deficit years the revolver draws to that floor before sponsor equity is called; in surplus years the revolver is repaid first, then the lender cash sweep applies, then the remainder above the floor is distributed to the sponsor. Annual FF&E reserve contributions fund refurbishment capex, and a brand-mandated improvement plan splits soft-goods and case-goods spend across specific years with contingency reserves.

Exit value is forward NOI divided by an exit cap rate. Sale proceeds repay the senior mortgage and any revolver balance, then credit residual cash and the remaining FF&E reserve back to the owner.

• The levered equity stream nets equity called against distributions received and adds exit equity, and that series drives levered IRR and the equity multiple. The multiple divides total cash returned by total equity actually called over the hold, so follow-on capital calls are captured correctly.
• The balance sheet rolls PP&E net of depreciation, working capital from receivable, inventory and payable days, debt, and equity as cumulative contributions less distributions. Validation checks confirm the balance sheet balances, occupancy stays within limits, DSCR holds above covenant from the post-ramp years, revenue streams sum to the total, and cash never goes negative.
• A sensitivity grid shows implied annualised returns across exit cap and NOI growth combinations. The public download is a values-only preview of the underlying model.

This template is designed for developers, investors and operators evaluating a full-service luxury hotel acquisition.