Hotel Investment Kpis
Hotel Investment KPIs & Analysis by XOTELS
Welcome to our XOTELS‘ Hotel Investment KPIs blog, where investors and hospitality professionals can delve into key performance indicators, expert evaluations, and emerging trends driving hotel investments. Equip yourself with vital insights to make informed decisions and enhance your investment outcomes in the dynamic hotel industry.
Operating Expense Ratio
Operating Expense Ratio
Using this KPI can help you evaluate whether an investment is worth your time by giving insight into how much it costs to manage / maintain the project. How?ย By taking the operational cost and rental income into account you will be able to compare the ratio (ideally under 80%) to make a well-informed decision for your investment opportunity. This step canยดt be overlooked and our hotel revenue management consulting company always recommends calculating the Operating Expense Ratio to ensure the full potential and financial health of your projects.Payback Period
Payback Period
To start, our hotel management company always recommends determining the actual payback period, otherwise known as break-even, is essential for a real estate investment project and can help to pick better projects with a fast payback period. This can be achieved by determining the number of years it will take to pay back the amount invested.Tenant Turnover
Tenant Turnover
This real estate KPI informs you at what rate your tenants are leaving, and will typically be calculated on an annual basis. Our hotel management company highly suggests knowing the tenant turnover rate will help you gain insight into which of your projects has a more stable tenant cycle. The lower the turnover rate the better since:Average Rent Price Per Property
Average Rent Price Per Property
As the name suggests, the KPI 'Average Rent Price Per Property' helps to keep track of your rental prices and is typically measured and recorded across various timeframes (i.e. weekly, monthly, quarterly and annual changes).ย Our hotel management company emphasizes on comparing the performance against the same period last year is crucial to ensure you're on the right track to create a successful investment project. You can also easily compare against other properties with this metric and see where opportunities are for your property.Loan to Value Ratio (LTV)
Calculation: LTV Ratio = Mortgage Amount / Appraised Property Value
When investing it is obviously favourable to accrue as little additional cost as possible while minimizing the amount of down payment on your loan to ensure you have plenty of cash on hand to manage your business and investments.ย
Average Mortgage Rate
Average Mortgage Rate
This KPI helps investors to evaluate if properties require refinancing. Specifically, investors can compare their mortgage rates (by turning it into an average if they have multiple properties) to the current index mortgage rate. Our hotel management company always suggests making this comparison,ย as it will tell if the property is better off being refinanced.
