HOTELS GUIDE
How to Calculate Hotel Cost per Key
Cost per key divides the defined hotel investment cost by completed, saleable guest rooms.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
State whether cost includes land, acquisition costs, construction, FF&E, fees, finance, pre-opening and working capital. Benchmarks are useless without the definition.
Calculation framework
Divide by rooms that will be available for sale, not an early concept count. Large public areas and F&B can raise cost per key while supporting other revenue.
Underwriting review
Compare hotels with similar quality, location, room size and amenity programme. A lower cost per key is not automatically a better project.
How to use the result
Use cost per key with value per key, NOI per key, yield on cost and total equity requirement in the feasibility decision.