Hotel Investment & Valuation: From RevPAR to NOI, Departmental Profits, Management Fees, FF&E Reserve, Hotel Cap Rates & Hold-Period Returns

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Build a hotel's year month by month: room nights sold from keys, days and occupancy, rooms revenue and RevPAR, the annual RevPAR weighted by days, and total revenue including food & beverage and other departments.
• Turn each department's revenue into departmental cost and profit with a variable and a fixed part, pool the margin over the hotel, and see how a 10% revenue drop hits a high-fixed-cost department much harder.
• Budget the costs that belong to no single department as a share of total revenue, deduct them from departmental profit to reach GOP, and express GOP as a margin and per available room per day.
• Deduct a base fee on revenue, an incentive fee that only starts above the owner's priority return, an FF&E reserve and the fixed charges from GOP, and arrive at the NOI that an investor capitalises.
• Capitalise NOI at a fictional cap rate, express the value per key, fill a two-way sensitivity grid of NOI change against cap rate, and translate a RevPAR drop into a change in value.
• Compare the owner's income under a management contract with a lease of fixed rent plus turnover rent in a weak, base and strong year, weight the scenarios and measure how much the owner's income swings.
• Size a rooms refurbishment from capex per key, turn the expected RevPAR uplift into extra NOI, work out the simple payback including the NOI lost during the works, and test whether the value created beats the cost.
• Set up a five-year hold: the purchase with acquisition costs in year 0, NOI and a refurbishment in between, an exit at a terminal cap rate net of selling costs, the IRR of the cash flows and a chart of the years.