Hotel Underwriting Calculator
Convert ADR and occupancy into RevPAR, revenue, stabilized NOI, hotel value, maximum loan proceeds, and equity including the PIP budget.
Request a financing review when you are ready to share the property, requested proceeds, and timeline.
How the Hotel Underwriting Calculator Works
The calculator multiplies average daily rate by occupancy to produce revenue per available room. Annual room revenue applies RevPAR to every available room night, then adds other hotel revenue. The selected operating expense ratio is deducted to estimate stabilized net operating income.
RevPAR = Average Daily Rate × Occupancy
Annual Room Revenue = RevPAR × Rooms × 365
Stabilized NOI = Total Hotel Revenue × (1 - Operating Expense Ratio)
How Maximum Hotel Loan Proceeds Are Sized
The calculator estimates hotel value by capitalizing stabilized NOI, then compares the purchase price with the indicated value for loan to value sizing. It separately converts NOI and the target DSCR into maximum annual debt service. Maximum loan proceeds are the lower of the DSCR and loan to value results.
Indicated Value = Stabilized NOI / Capitalization Rate
Maximum Debt Service = Stabilized NOI / Target DSCR
Maximum Loan = Lower of DSCR Limit and Loan to Value Limit
How the PIP Budget Affects Equity
A property improvement plan can materially increase the cash required for a hotel acquisition. This calculator adds the PIP budget to the purchase price when estimating total project cost and borrower equity. Actual lenders may finance part of an approved PIP, require the borrower to fund it, establish completion reserves, or release funds through construction draws.
Hotel Underwriting Worked Example
A 100 room hotel with a $150 average daily rate and 70 percent occupancy produces $105 RevPAR and about $3,832,500 of annual room revenue. Adding $750,000 of other revenue and applying a 70 percent expense ratio produces about $1,374,750 of stabilized NOI before loan sizing.
Choosing Hotel Inputs and Reading the Result
Use trailing performance for an as is scenario and support any stabilized ADR or occupancy with market evidence. Include food, beverage, parking, meeting, resort, and other income in other revenue only when the property actually earns it. The PIP belongs in total project cost, while the operating expense ratio should capture the recurring costs needed to produce stabilized NOI.
Frequently Asked Questions
How do you calculate hotel RevPAR?
Multiply average daily rate by occupancy. A $150 ADR at 70 percent occupancy produces $105 of revenue per available room.
What expenses should be included in hotel NOI?
Hotel underwriting commonly considers departmental expenses, undistributed operating expenses, management and franchise fees, utilities, taxes, insurance, payroll, repairs, and replacement reserves. Lender treatment can differ.
Will a hotel lender finance the PIP budget?
Some structures may finance an approved portion, while others require borrower funding or a controlled completion reserve. The lender will review the franchise requirements, scope, timing, bids, and borrower liquidity.