Hotel Valuation Calculator
USALI-aligned hotel P&L modeling with RevPAR, GOP, and direct capitalization valuation. Free, instant, no login required.
How Do You Value a Hotel Property?
Hotel valuation differs from other commercial property types because hotels are operating businesses with daily rate resetting. The standard approach uses the income capitalization method aligned with the Uniform System of Accounts for the Lodging Industry (USALI).
The process starts by projecting stabilized revenue based on room inventory, average daily rate (ADR), and occupancy. Departmental expenses (rooms, F&B, other operated departments) are deducted to arrive at Gross Operating Profit (GOP). Then undistributed expenses, management fees, and FF&E reserves are subtracted to determine Net Operating Income (NOI).
The indicated value is derived by dividing NOI by an appropriate capitalization rate. Institutional investors also commonly use a 10-year DCF model with RevPAR growth assumptions and a terminal cap rate for more detailed analysis.
What is RevPAR and Why Does It Matter?
Revenue Per Available Room (RevPAR) is the hotel industry's most important performance metric. It combines both rate and occupancy into a single number:
RevPAR = ADR × Occupancy Rate
RevPAR allows direct comparison between hotels of different sizes. A 100-room hotel with $200 ADR and 80% occupancy (RevPAR = $160) generates more revenue per room than a 500-room hotel with $250 ADR and 60% occupancy (RevPAR = $150), even though the larger hotel has higher total revenue.
Hotel Cap Rates by Chain Scale
Cap rates reflect the risk and management intensity of each hotel segment:
Luxury / Upper Upscale
5.0% - 7.0%
Full Service / Upscale
7.0% - 8.5%
Select Service
8.0% - 9.5%
Limited Service / Economy
9.0% - 11.0%
Hotels generally carry higher cap rates than apartment or office properties due to their operating business risk, daily rate volatility, higher capital expenditure requirements, and management complexity. Gateway city luxury hotels are the exception, often trading at cap rates competitive with core office assets.
Need a full hotel DCF with USALI P&L?
CREagentic's Valuation Engine provides full USALI-aligned hotel modeling with departmental P&L, F&B revenue, ancillary income, PIP budgets, and multi-year DCF projections. Start free.