Finance Methodology and Definitions
HotelToolbox finance tools use deterministic formulas applied only to user-entered assumptions. Currency displays are rounded to whole U.S. dollars; calculations retain full precision.
Calculated NOI
Total entered operating revenue minus departmental expenses, undistributed expenses, and only the fixed or ownership charges the user selects. Debt principal, debt interest, income taxes, depreciation, amortization and capital expenditures are excluded.
Cap-rate valuation
Estimated value = entered annual NOI ÷ entered capitalization rate. Implied cap rate = entered NOI ÷ entered value. This is not an appraisal.
Debt coverage
DSCR = entered or user-adjusted NOI ÷ entered annual debt service. No universal approval threshold is supplied.
Loan payment
Standard periodic amortization formula. When interest is zero, principal is divided evenly across amortization periods. Balloon balance is the remaining principal after the entered term.
Cash-on-cash
Annual entered net cash flow ÷ total entered cash investment. Appreciation, sale proceeds and tax effects are excluded unless entered elsewhere.
Break-even
(Entered fixed costs − other contribution) ÷ contribution per occupied room ÷ available room nights. Negative occupancy is never displayed.
Renovation NPV
Entered incremental cash flows are discounted at the user-entered rate. Future impacts are assumptions, not forecasts.
Sensitivity analysis
ADR movement is modeled as a percentage change. Occupancy movement is modeled as percentage-point change; the two are not interchangeable.
Known limitations
These tools do not evaluate contracts, title, condition, environmental risk, taxes, market conditions, lender underwriting or professional due diligence. Missing inputs remain missing.
HotelToolbox uses familiar hospitality finance terms for educational calculations. It does not reproduce the Uniform System of Accounts for the Lodging Industry, certify USALI compliance, or replace licensed USALI guidance, professional accounting judgment, or property-specific reporting policies.