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!
I'll chime in here:
This gets you to Gross operating income.
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.
Bless your soul - thanks!
replying to save
Thanks for this super helpful!
I was just wondering where does tax, interest and depreciation get incorporated in the model. Is this a post NOI line item?
bump
Curious - what is the typical EBITDA and NOI margins for a full and select service hotel
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.
How do you project expenses for a new ground up hotel?
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?
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