What Is FF&E Reserve And Should You Include It?
Way, way down at the bottom of the Hotel Pro Forma is a line that reads FF&E Reserve. Sometimes it shows zeros but sometimes there is a large amount. So if you are asking yourself what falls in this category and should I be including an amount in this line item, you will find this…
How Do Management Fees Work??
When you are creating your hotel pro forma, according to USALI of course, you will have line items for Management Fees. Base Management Fees and Incentive Management Fees. If you are operating an independent hotel, these obviously do not apply. But if have you have a Hotel Management Agreement (HMA) with a brand then these…
How To Develop A Comp Set For Your Revenue Projections
Building a Comp Set is an important step in hotel underwriting. The Comp Set has several applications. One of the most important of those is for building a Penetration Analysis to help solidify your ADR and Occupancy projections. Creating a Comp Set is an analytical process that can go through many revisions. However, starting with…
How To Project ADR & OCC In Your Hotel Pro Forma
Step #1: Start With Your Comp Set It is always best practice to project your ADR & OCC that is derived from a Comp Set. The Comp Set (at least 4 other hotels) will allow you to get an idea of what similar hotels are achieving so that you have a realistic basis for your…
How Historic Tax Credits Are Helping Hotel Projects Become Financially Viable
Current State of Hotel Development Hotel development has continued to soften in 2025 due mostly to high construction costs, higher interest rates and overall caution of lenders for projects. According to Costar, the U.S. hotel development pipeline continued to contract in September 2025, marking the ninth consecutive month of year-over-year decline. Impact of Tax Credits on…
What Is Negative Leverage And How It Impacts Levered IRR
A question that sometimes comes up from clients is why is my Levered IRR is lower than my Unlevered IRR? It seems like a great question right? After all, the point of adding debt is to drive up your Levered IRR and overall returns of the project. Well depending on the project, this may not…
5 Key Metrics In Hotel Financial Modeling
When building a hotel financial model, there can be up to hundreds of inputs and many KPIs to track. However, there are several that need to pass the sniff test of an investor before any additional due diligence work is done. Here are 5 key hotel financial modeling metrics to know and track closely in…
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