How does ADR + occupancy translate to hotel loan size?

Keys × ADR × occupancy × 365 = annual room revenue. Add F&B + ancillary revenue (10 to 30% of room revenue depending on flag). Deduct operating expenses (35 to 55% of total revenue depending on flag tier). Result: NOI. CMBS sizing then runs 3 constraint test: NOI ÷ debt yield floor (10 to 11% hotel) = max loan by DY; NOI ÷ (DSCR × annual debt service per dollar) = max by DSCR; appraised value × LTV cap (65 to 70% hotel) = max by LTV. Smallest result is the binding constraint.

RevPAR = Revenue Per Available Room = ADR × Occupancy. Industry standard hotel performance metric. Tier 1 limited service Hampton Inn/Courtyard: $90 to 130 RevPAR. Branded full service: $130 to 200. Upper upscale: $180 to 280. Luxury: $300+. RevPAR drives revenue but doesn't directly determine loan size, NOI does. The NOI margin matters as much as the RevPAR number.

Why is hotel debt yield so high?

Hotel CMBS demands 10 to 11% debt yield (vs. multifamily 7.5%, industrial 8.0%). Three structural reasons: (1) operating business cash flow volatility, hotels are operating businesses, not passive real estate. (2) RevPAR cyclicality, peak to trough swings 20 to 40% in cycles. (3) brand flag concentration risk, termination drops asset value 20 to 40%. Conduits price all three risks via debt yield floor.

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Hotel ADR / RevPAR Loan Sizer

Keys × ADR × occupancy → RevPAR → revenue → NOI → max CMBS loan at 10 to 11% debt yield floor + DSCR + LTV constraints.

Property + Operations

Hotel TierKey CountADR (Average Daily Rate)

Occupancy (%)

Post PIP Appraised Value

Branded Select Service typical: 35% NOI margin, 12% F&B as share of room rev, 10.5% debt yield floor, 68% LTV cap, 6.50% CMBS rate.

Revenue → NOI → Loan

RevPAR	$119/night
Annual Room Revenue	$6.50M
F&B + Ancillary	$781K
Total Revenue	$7.28M
NOI (35% margin)	$2.55M

Max CMBS Loan (DSCR binds)

$22.48M

By DSCR (1.40x)

$22.48M

By LTV (68%)

$30.60M

By Debt Yield (10.5%)

$24.28M

About these figures

Rate, spread, leverage and term levels shown here are indicative. They reflect general conditions among direct capital sources as of October 1, 2026 and describe what the market has recently supported, not an outcome available to any specific borrower.

Actual pricing, leverage and terms are determined by the lender through underwriting, once full transaction materials have been reviewed. Nothing shown here is a quote, a commitment, an offer of credit or a guarantee.

PeerSense is a capital advisory firm. We source capital through a curated network of commercial lenders and capital sources. Every credit decision belongs to the lender.

Market conditions move. Figures may change without notice, and a level that cleared last quarter may not clear today. What these terms mean.

See Hotel PIP to CMBS Strategy →

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