Behind the model
How the hotel model works
Every number in the calculator is derived bottom-up from your inputs — no black box. Below is each formula, paired with a worked example from the default 60-key midscale hotel at ₹5,500 ADR. Change any input in the tool and these relationships hold.
Rooms, ADR & RevPAR
The room count, average daily rate and stabilized occupancy set the revenue engine. RevPAR is the single most-watched hotel metric.
Rooms available / year
keys × 365
60 × 365 = 21,900
Rooms sold / year (stabilized)
keys × 365 × stabilized occupancy
× 70% = 15,330
ADR (average daily rate)
rate per occupied room-night (your input)
₹5,500
RevPAR
ADR × occupancy
₹5,500 × 70% = ₹3,850
GOPPAR
gross operating profit ÷ available rooms
₹2,674 / room-night
CapEx — build cost
Per-key construction + FF&E scale with the room count; land (with stamp duty), pre-opening and approvals are added once; then contingency and interest-during-construction. Per-key is an output, never an assumption. Build costs should include GST — input-tax credit on hotel construction is blocked under Sec 17(5).
Construction
keys × construction / key
60 × ₹45 L = ₹27 Cr
FF&E
keys × FF&E / key
60 × ₹8 L = ₹4.8 Cr
Stamp duty on land
land × 6% (only when land > 0; 5–7% by state)
₹8 Cr × 6% = ₹48 L
Base cost
land + stamp duty + construction + FF&E + pre-opening + line items
₹44.3 Cr
Contingency
base × 8%
₹3.54 Cr
Interest during construction (IDC)
total × debt% × interest% × (months ÷ 12) × ½
24 mo → ₹2.51 Cr
Total project cost
base + contingency + IDC
₹50.3 Cr
CapEx per key (derived)
total project cost ÷ keys
₹83.9 L / key
OpEx — running cost, GOP & management fees
Operating cost is a % of revenue; its ratio drifts only by the gap between cost inflation and ADR growth (revenue already carries the ADR escalation). GOP = revenue − operating cost, before management fees and maintenance — the USALI basis Indian HMAs (IHCL, Marriott, Accor) use for the incentive fee.
Operating cost
revenue × 55% × ((1 + 5%) ÷ (1 + 5%))^(yr−1)
stabilized: ₹7.16 Cr/yr
GOP (gross operating profit)
revenue − operating cost (before mgmt fees + maintenance)
stabilized: ₹5.86 Cr/yr (45% of revenue)
Base management fee
revenue × 2% (Indian HMAs: 1–3%)
stabilized: ₹26 L/yr
Incentive management fee
max(0, GOP) × 7% (Indian HMAs: 6–8% of GOP)
stabilized: ₹41 L/yr
Maintenance / FF&E reserve
base CapEx × 1% / yr (≈ the standard 4%-of-revenue reserve)
₹52.7 L/yr (escalated)
Total OpEx
operating cost + base fee + incentive fee + maintenance
stabilized: ₹8.36 Cr/yr
Revenue & the occupancy ramp
Room revenue is rooms-sold × ADR; F&B and other revenue is a % of room revenue. A new hotel leases up linearly from a soft opening to a stabilized plateau; staged openings ramp per cohort.
Room revenue
keys × occupancy × ADR × 365 × (1 + ADR esc)^(yr−1)
stabilized: ₹9.3 Cr/yr
F&B & other revenue
room revenue × 40%
stabilized: ₹3.72 Cr/yr
Total revenue
room revenue + F&B revenue
stabilized: ₹13 Cr/yr
Occupancy ramp (linear)
start + (stabilized − start) × (age−1) ÷ (ramp yrs − 1)
50% → 70% over 3 yrs
Phased opening (vintages)
each tranche of keys opens on its own year and ramps from scratch
all-at-once by default
Financing — debt, moratorium, tax & depreciation
Long-tenor hospitality debt with an interest-only moratorium across the build + lease-up, then the principal amortizes; straight-line depreciation; tax with loss carryforward.
Debt / equity split
debt = total cost × debt% ; equity = remainder
₹25.2 Cr debt · ₹25.2 Cr equity
Construction defers first revenue
lead years = ⌈ months ÷ 12 ⌉ − 1 (extra years before revenue)
24 mo → 1 lead yr
Principal moratorium
interest-only for the first N years from opening, then amortize
2 yr grace, 14 yr tenor
Equal-principal repayment
debt ÷ (tenor − moratorium) each amortizing year
₹2.1 Cr
Annuity (EMI) option
debt × r ÷ (1 − (1+r)^−(tenor−moratorium))
level payment alternative
Interest
outstanding balance × interest rate
year 1: ₹2.64 Cr (interest-only in grace)
Depreciation (straight-line, ex-land)
(total cost − land − stamp duty) ÷ 20 yrs — land is never depreciable in India
₹2.09 Cr/yr
Tax (with loss carryforward)
max(0, PBT − losses) × 25% ; losses carry forward
shelters early-year ramp losses
Returns, coverage & exit
The unlevered cash flows give the project view; the equity cash flows give the geared view. Project IRR excludes the interest shield so it is financing-independent. The hotel is sold at the horizon at an EBITDA ÷ cap-rate valuation.
EBITDA
revenue − operating cost − mgmt fees − maintenance
stabilized: ₹4.66 Cr (36% margin)
Unlevered (project) FCF
EBITDA − project tax − CapEx (project tax excludes interest)
Project IRR 10.3%
Equity FCF
PAT + depreciation − principal − equity-funded CapEx
Equity IRR 11.8%
NPV
Σ unlevered FCF ÷ (1 + discount)^t
@ 11% = -₹3.56 Cr
Payback
year cumulative unlevered cash flow first turns positive
12.2 yr
DSCR
CFADS ÷ debt service ; CFADS = EBITDA − tax (amortizing years only)
min 1.23× · avg 1.49×
LLCR
PV(CFADS over loan life) ÷ debt
1.40×
Equity multiple (MOIC)
Σ equity cash returned ÷ equity invested
4.94×
Terminal value at exit
final-year EBITDA ÷ exit cap rate
₹8.37 Cr ÷ 8% = ₹105 Cr
Capital-gains tax on exit
max(0, sale − net book value) × 12.5% — India's 12.5% LTCG on immovable property (post-2024, no indexation); land keeps its full book value since it never depreciates
₹10.7 Cr
Break-even occupancy
stabilized occupancy at which NPV = 0
75%
Operations & ESG
What the hotel consumes and emits at the stabilized run-rate, on a per-occupied-room basis.
Energy
rooms sold × kWh per occupied room
6,13,200 kWh/yr
Water
rooms sold × litres per occupied room ÷ 1000
9,198 kL/yr
Carbon
energy × grid emission factor ÷ 1000
435 tCO₂e/yr
Carbon intensity
carbon ÷ rooms sold
28.4 kg / occupied room
These are transparent planning estimates, not a quote. A real hotel needs a proper feasibility study and DPR — that’s where we help. Open the calculator →