HOTELS GUIDE
How to Underwrite a Hotel Acquisition
Hotel acquisition underwriting combines operating performance, property condition, management structure, financing and exit value.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
Rebuild room revenue from available rooms, occupancy and ADR. Test channel costs, segmentation, F&B and other revenue rather than accepting top-line totals.
Calculation framework
Bridge revenue to GOP, EBITDA and NOI with explicit management, franchise, fixed charges and FF&E reserve assumptions.
Underwriting review
Add renovation, PIP, working capital and closure effects to acquisition sources and uses. These items affect both equity and the stabilization path.
How to use the result
Stress ADR, occupancy, payroll, renovation timing, interest rate and exit cap. Compare value per key and debt metrics with relevant transactions.