Operating evidence and financing
What this package helps you examine
Hotel revenue is earned night by night while many operating and financing costs continue through the low season. Annual NOI alone can conceal the month in which cash runs out. Build a room-revenue bridge, a monthly operating schedule and a separate plan for property improvements, brand obligations and management transitions.
Reconcile room activity to revenue
Start with available room nights, paid occupancy and average daily rate using consistent periods. Separate rooms out of service, complimentary rooms, cancellations and other adjustments. Room revenue is not total hotel revenue: identify food and beverage, parking, resort or other charges separately and preserve their associated costs. Host Hotels' operating statistics illustrate the distinction among occupancy, room rate and revenue measures without supplying assumptions for this property.
Model costs by their actual behavior
Separate costs that move with occupied rooms or revenue from payroll, taxes, insurance and other obligations that do not fall proportionately in a slow month. Reconcile franchise, reservation, management and incentive fees to the actual agreements. Deduct an appropriate modeled replacement reserve separately from planned improvement spending and explain whether any reserve cash is available for that work.
Connect the calendar to funding
Show the seasonal cash trough before taking annual distributions or assuming all positive months occur first. A property improvement plan can remove rooms from sale while consuming construction cash. Match work, inspections, brand acceptance and reopening to loan-draw conditions. A completed renovation does not by itself establish that every room may reopen or that an operating agreement can be transferred.
Use the workbook
- Use Assumptions!D5 for Base (1) or Downside (2), and the labeled scenario input rows. Enter source data in Room Nights!D10:L21; preserve formula cells and an untouched workbook copy.
- Inspect available room nights, occupancy, room rate and nonroom contribution monthly. Keep variable operating costs, fixed costs, reserves and improvement capital distinct; review the seasonal cash trough.
- Reconcile Operations to Summary. Apply the entered lender adjustment separately to the modeled cash flow. Sizing uses amortizing debt service, while first-year payments reflect the entered interest-only period.
- In Assumptions, replace illustrative value, LTV, DSCR, debt yield, rate, amortization and requested ceiling with the intended scenario. Review capacities in Debt and Funding. The smallest modeled capacity does not establish eligibility or approval.
- Closing equity includes the entered opening cash and restricted reserves. Additional operating cash need is measured after that opening cash, so do not add it twice. Inspect monthly cash and remaining principal at maturity.
- Read Review for model conventions and limitations. Save each scenario with its supporting evidence and date; actual lender definitions, legal rights and professional findings control the transaction.
Questions to prepare for a lender
How do room statistics reconcile to cash revenue?
Property-management reports, room-night inventory and bank-reconciled operating statements.
What costs continue during the low season?
Monthly expense history, payroll plan and fixed versus variable cost assumptions.
What is owed to the brand and manager?
Franchise, management and reservation agreements with all fee and consent terms.
What work is required and when can rooms reopen?
Current improvement plan, bids, room-outage schedule and acceptance milestones.
When is the deepest cash deficit?
Monthly cash rollforward after debt service and required capital payments.
Who funds an extended outage or transition?
Accessible sponsor liquidity and a documented management/brand transition plan.
03 / Prepare
Build the evidence file
Use this as a preparation checklist. The lender determines the documents, definitions and review conditions for the actual transaction.
Cash flow and operations
- Monthly occupancy, average rate and available-room-night reports.
- Rooms, food and beverage, ancillary revenue and associated expense detail.
- Operating statements reconciled to cash and reservation-system records.
- Franchise, management, reservation and incentive fee calculations.
- Payroll, tax, insurance, utility and major service-contract support.
- Seasonal cash schedule with replacement reserves and planned distributions.
Property and collateral
- Room inventory and evidence of legal operating capacity.
- Condition assessment and brand property-improvement requirements.
- Detailed work scope, contractor bids and room-outage calendar.
- Environmental, life-safety and other third-party reports requested.
- Franchise and management agreements affecting the property.
- Insurance terms relevant to restoration and business interruption assumptions.
Sponsor and execution
- Sponsor hotel ownership and management experience with comparable operations.
- Operating entity, property owner and guarantor structure.
- Management team continuity and replacement plan.
- Liquidity after committed improvements and other guarantees.
- Historical performance of relevant sponsor-operated properties where requested.
- Equity authority for seasonal deficits and improvement overruns.
Closing and funding
- Brand, manager and other required transfer or financing consents.
- Loan improvement holdback and reimbursement acceptance conditions.
- Payoff, title and closing cost support.
- Documented treatment of restricted reserve balances.
- Working-capital handover, deposits and prebooked revenue reconciliation.
- Closing-to-reopening funding schedule with each responsible party named.
Watch for these assumptions
- Annual positive cash flow does not establish that the lowest month is funded.
- Occupancy and room rate must use compatible room-night definitions.
- Do not deduct the same franchise or management fee inside both a margin assumption and an expense line.
- An improvement reserve is not unrestricted cash unless the documents permit the contemplated use.
Before you rely on the result
- Reconcile room statistics before accepting the revenue run rate.
- Fund the low season and improvement outage as dated events.
- Obtain the relevant brand and management consents before relying on uninterrupted operation.
Scope and limitations
- Educational analysis; not a financing offer, appraisal, legal opinion or program eligibility determination.
- Workbook figures and thresholds are illustrative editable assumptions, not current lender quotes or universal underwriting standards.
- Document requests depend on the lender, transaction, jurisdiction and property; address unresolved issues with the relevant qualified professional.
Sources and applicability
These references support the stated asset and risk context. The questions and document lists are preparation tools, not a statement that every lender requires or accepts the same package. Actual contracts, applicable rules and the chosen lender determine the transaction requirements.
- Host Hotels & Resorts 2025 Form 10-KItem 7, Comparable Hotel Operating Statistics and Results · Checked 2026-10-21Source-specific context; numerical examples and decision workflow are original hypothetical analysis.