hotel asset
Hospitality Financial Leadership: What Are CAP Rates and How to Use Them
David Lund | November 4, 2024
A capitalization rate, or cap rate, is a measure of the income return on an asset, such as hotel or rental property, relative to its purchase price. It is calculated by dividing the net operating income (NOI) of the asset by its purchase price. That’s what this piece is all about. It also must be said from the get-go that understanding cap rates is not so difficult. “Normally” NOI is calculated using all income less all operating expenses but does not include costs for debt, depreciation, amortization, reserve for capital expense or income taxes. That’s the typical basis for the calculation of the hotel’s value, est...
How to Add Value to Your Hotel Asset
Carrie Russell | May 16, 2019
By Carrie Russell At the most basic level, the value of a hotel is based on the property's net income divided by a capitalization rate. As such, one has two possible levers to adjust as a means of increasing a property's value: either increase the property's net income or decrease the capitalization rate. The capitalization rate, which is a factor that represents both the risk and the desired return associated with a given asset, is in actuality difficult to influence. Firstly, returns are market driven, which means that the capitalization rate is determined by market forces, not the will of owners. Secondly, it is the buyer's perceptio...
Evolution Of Asset Management In India’s Hotels
Hotelivate Private Limited | April 25, 2018
Not too long back, hotel ownership and hotel management in Asia were like Siamese twins – co-joined at birth, despite being distinctly different from each other. Four domestic chains largely dominated the hotel ownership landscape – IHCL (Taj), EIH (Oberoi) and ITC (ITC Hotels, WelcomHotel) and the government-owned ITDC (Ashok). Most of these started as a single hotel entity but thereafter grew organically and, in the fullness of time, some of these companies have been able to create enviable brands that have the strong recall at a global level. However, business was carried out via a rather linear equation wherein the ownin...
