What is a “normal” cap rate for a hotel? Or is there such a thing?
Also, even if a hotel listing doesn’t come with a NOI statistic, should I be able to estimate this?
Expenses = desk clerk, housekeeping, utilities, insurance, taxes…
Income = number of rooms x occupancy rate x rental rate x 365.25
???
Hi,
All commercial property is evaluated using cap rates, and yes hotels have cap rates. Once you inquire about a listed hotel through your agent / broker they should be able to acquire the property financials which should show income / expenses and provide an NOI number.
Like any commercial property the financials given should be completely rebuilt forensically to compare the results.
Make sure your list of potential expenses is correct for the size and type of property! The 100% number is easy to find as XX times 365, but the actual number should be pulled from area data on room rates and occupancy averages. Remember to calculate rate premiums for holidays, events, weekends, first floor, view, courtyard or outside, etc.
GR
Thanks