How does ADR + occupancy translate to hotel loan size?

Keys × ADR × occupancy × 365 = annual room revenue. Add F&B + ancillary revenue (10-30% of room revenue depending on flag). Deduct operating expenses (35-55% of total revenue depending on flag tier). Result: NOI. CMBS sizing then runs 3-constraint test: NOI ÷ debt yield floor (10-11% hotel) = max loan by DY; NOI ÷ (DSCR × annual debt service per dollar) = max by DSCR; appraised value × LTV cap (65-70% 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: $90-130 RevPAR. Branded full-service: $130-200. Upper-upscale: $180-280. 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 10-11% 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 20-40% in cycles. (3) brand-flag concentration risk — termination drops asset value 20-40%. Conduits price all three risks via debt yield floor.

Free Hotel Tool

Hotel ADR / RevPAR Loan Sizer

Keys × ADR × occupancy → RevPAR → revenue → NOI → max CMBS loan at 10-11% 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

See Hotel PIP-to-CMBS Strategy →

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