We're going to change things up a bit today and write directly to all the hotel owners out there. So all you GM and revenue managers- or all of you that don't want to own the place someday- go ahead and put this down, or minimize this window.
Oh, everyone's still here? OK, let's get to it then.
We want to talk about RevPAR (no surprise there), but specifically how it pertains to the capitalization rate of the property. Everyone knows how important RevPAR is to cash flow, and to the net income of the operation, but too often RevPAR's inextricable link to cap rate is overlooked. And this is unfortunate, because in hotels, even moderate increases in RevPAR can translate into spectacular increases in cap rate; if we take for example a 10% increase in RevPAR at a $50 million in revenue hotel can yield a 50% gain in cap rate or more.
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