Hotel Feasibility Calculator

What this feasibility check does

Before you buy land or sign a construction contract, you need a quick answer to one question: can this hotel pay its running costs and its loan, and still return the money invested? This calculator builds a simple stabilised-year model from your room count, cost per key, ADR, occupancy and cost ratios. It shows revenue, GOP, EBITDA, debt service, DSCR, payback and return, and gives a plain-language verdict.

How to read the results

• Cost per key: land, construction and FF&E divided by rooms. It is the number lenders and investors compare first.
• GOP and EBITDA: GOP is profit after operating costs; EBITDA also deducts insurance, property tax and a reserve for replacing furniture and equipment.
• DSCR: how many times your EBITDA covers the yearly loan repayment. Many lenders look for at least 1.25 to 1.5. Below 1.25, one weak season can make you miss EMIs.
• Simple payback and ROI: years to recover the project cost from EBITDA, and EBITDA as a percentage of the project cost. They ignore tax, inflation and the time value of money.

Be honest with the assumptions

Most feasibility mistakes come from optimistic inputs, not from the formula. Use the ADR that similar hotels in your micro-market actually achieve, not their rack rate. New hotels usually take two to four years to reach stabilised occupancy, so plan cash for the ramp-up and for construction delays. Then test a bad case: drop occupancy by 10 points and ADR by 10%, and see whether DSCR stays above 1.

Next steps

• Check the monthly loan repayment with the hotel ROI calculator to compare returns from different project sizes.
• Find the minimum occupancy you need with the break-even occupancy calculator.
• Before a bank or investor meeting, get a detailed project report prepared and reviewed by a qualified professional.

Frequently asked questions