Hotel Feasibility Model
Hi all
I am working on a live case on a hotel development. I have a question on revenue projection.
Someone built a revenue model with only one years of positive revenue based on cap rate and NOI provided by hotel operater. Detail as below
Yr 2025 11m NOI povided by hotel operator projection times 7% cap rate equal to 157m net realized value= yr 2025 revenue
That doesn't make any sense to me. Instead, I think it should project 11m annual revenue like from 2020 when it finishes development and start hotel operation. and generate similar that amount each year for say 5 years of projection period and plus an residual value at the end. (assuming no growth)
2019 11m 2020 11m 2021 11m .... 2025 11m +residual value=11m/cap rate
Cheers Thank you
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