Hotel cap rate.

Hotel investment ROI calculator measures cap rate based on rooms, ADR (Average Daily Rate), occupancy, and operating expenses ratio. 10M hotel, 100 rooms, 150 ADR, 75% occupancy, 50% opex ratio = 4.1M revenue, 2.05M NOI, 20.5% cap rate. Hotels typically deliver 8-15% cap rates - higher than residential due to operating intensity.

Example: 10M boutique hotel, 100 rooms, 150 ADR, 75% occupancy. Annual revenue = 100 × 150 × 365 × 0.75 = 4.1M. NOI at 50% opex = 2.05M. Cap rate = 20.5%. Strong return reflects operating risk - hotels are operating businesses, not passive real estate. RevPAR (revenue per available room) = 150 × 0.75 = 112.50.

Hotel investment realities: (1) Operating intensity - hotels are businesses needing daily management. (2) Cyclical (1st to fail in recessions, 2008 vacancies hit 30%). (3) Brand affiliation matters (Marriott/Hilton flag adds 10-20% revenue). (4) Seasonal patterns. (5) Capex heavy (full refresh every 7-10 years at 10-15% of value). Better to invest via REITs (Host Hotels, Park Hotels, RLJ Lodging) than direct hotel ownership for most investors - same exposure, professional management.

Run it with sensible defaults

Using hotel purchase price of 10,000,000, number of rooms of 100, average daily rate of 150, occupancy of 75%, the calculation works out to 20.53%. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Hotel Purchase Price, Number of Rooms, Average Daily Rate, Occupancy %, and Operating Expense Ratio % — do not pull with equal force. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.

How the math works

Annual revenue = rooms × ADR × 365 × occupancy. NOI = revenue × (1 - opex %). Cap rate = NOI / price. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

Using this well

Treat the output as one point on a wider map. Run it three times — a pessimistic case, a central case, and a stretch case — and plan against the pessimistic one. That habit alone separates people who stick with an investment plan from those who bail at the first wobble.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.