Hotels Financial Modelling Help - Building a model first time

Hi all,


I was wondering if anyone can help me with my first hotels model. I have had little steer from seniors but need to get this done asap. Also I have no financials/assumptions it is from scratch and I was told we will get information later.

1)  Clarification of Order: 

I go from Revenue > EBITDARM (Rent & Management Fee) > Less Management Fee > EBITDAR > Less Rent  > EBITDA 

At this stage I am unsure whether to put in  'FF&E' to get to NOI or does this come after? I am also unsure where Acq. Capex goes -  but think this goes after NOI right?


2) How do I proceed to Free Cash Flows - I  need to highlight  this and ultimately input debt assumptions and then get to an exit multiple 


3)  Capital Structure - ownership i.e.  debt/repayment/refi/acq./capex - I need to model this.  So any 'structure' or methodology would be super helpful.




Thanks guys -  I really appreciate any help!











 
Most Helpful

I'll chime in here:

  • Total Revenue
    • Room Revenue
    • F&B Revenue
    • Other Revenue
    • Misc. Revenue
  • Operating Department Expenses
    • Room Expenses
    • F&B Expenses
    • Other Expenses
    • Misc. Expenses

This gets you to Gross operating income.

  • Undistributed Expenses
    • Admin & General
    • Advertising & Promotion
    • Maintenance
    • Utilities
    • Information & Telecommunications
    • Franchise Fees
    • Can sometimes include a 3% Management fee in here or below GOP

This gets you to Gross Operating Profit

GOP less fixed expenses (property tax, insurance) gets you to EBITDA, then less a 4% FF&E reserve gets you to NOI.

3) capital structure really depends. Usually 65% LTV and perhaps 2nd tranche to fund the PIP.

You can PM me for more details.

 

Not to grave dig but I would assume one of the hotels I have experience with did 20-30% EBITDA margin pre-COVID. This was for a full-service and CBD located asset in a southern secondary market

@brosteph Any quick inputs? My intuition on limited-service is that they should operate at higher margin (30-40%) since F&B margins are not good and market may be dislocated (less institutional presence). No experience in hotel, just curious about the sector.

 

This is a tough one because it varies between different types of hotels (i.e. Full service, select service and limited service).

As well would be dependent on the number of rooms. For example, something like your telephone contract may be based on the # of rooms you have (i.e. $1 per room per month). So you would really have to dive further into each line item. Many of the operating costs are purely fixed in nature.

I have never done this myself, but ideally if you have a comparable property for reference then your costs will likely be similar. 

 

What does undistributable expenses actually qualify as?

 

Ut ad enim laborum natus. Velit exercitationem harum laudantium explicabo ea. Quod et impedit in corrupti dolores reprehenderit. Ut itaque ipsam et quo. Iste est et voluptas id et voluptatem perspiciatis corporis. Provident et dicta tempore deserunt.

Dicta rerum facilis ut earum voluptatibus consequatur. Quis nesciunt voluptatibus qui adipisci debitis et qui. Non cumque esse provident qui ut consequatur accusamus.

Necessitatibus nulla atque ipsum illo. Itaque assumenda beatae sed quam inventore. Voluptas veniam voluptates minima officia. Sint illum asperiores ipsam iure voluptatum quibusdam nihil. Cumque quos accusantium et. Ducimus ut saepe ratione quaerat et consectetur quaerat.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”