Hotel Development Financial Model (Excel XLSX)

Hotel Development Financial Model presents the case where a hotel is constructed with the intention to operate it and potentially sell it after a few years. The model generates cash flows on a project and equity basis and also calculates the relevant metrics (cash on cash, Internal Rate of Return, net present value, loan to value, debt yield, coverage ratio, and DSCR). The financing options for the project include equity funding from investors and a bank loan (can be amortizing, interest-only, or custom).

So, a quick overview of the model, in the contents tab you can see the structure of the model, and by clicking on any of the headlines to be redirected to the relevant worksheet.

On the manual tab, you can feed the general information for the model such as: model name, responsible, timeline of the model, and date, and currency conventions.

Additionally, there is a description of the color-coding of the model in the same tab. Inputs are always depicted with a yellow fill and blue letters, call up (that is direct links from other cells) are filled in light blue with blue letters while calculations are depicted with white fill and black characters.

There is also a color coding for the various tabs of the model. Yellow tabs are mostly assumptions tabs, grey tabs are calculations tabs, blue tabs are outputs tabs (that is effectively results or graphs) and finally, light blue tabs are admin tabs (for example: the cover page, contents, and checks).

Moving on to the inputs tab, you can adjust the various assumptions of the model based on the specifications and requirements of your business (in yellow whatever can be amended as an assumption). So effectively you can adjust a set of inputs such as construction costs (Land & Related Costs, Administrative Costs, Permits, and Other, Hard Costs, Building Operations, Closing Costs, Finance Costs), and the relevant debt gearing of the financing. Also, you can amend occupancy rates and rooms along with the hotel and events area so as to generate revenues from rooms, food and beverages, and others. Expenses are separated into direct, indirect, and other expenses. Afterward, you can set debt financing assumptions (interest rates, tenor in years, loan type, and debt issuance costs), and valuation assumptions such as the exit year when the property will be sold, the exit cap rate and selling costs, as well as the discount rates, used (project and equity).

On the calculation tab, all calculations are performed. The calculations follow the same logical flow in the inputs tab. As already mentioned, no inputs from the user are needed here, as all the inputs are fed in the yellow cells on the inputs tab mainly. So, in this tab construction costs, revenues, expenses, financing flows, and free cash flows are calculated.

On the Outputs tab, everything is aggregated into a cash flow statement, together with free cash flow on a project basis as well as on an equity basis. The same is done on a yearly basis on the next Output tab.

The most important investment metrics are presented on the ratios tab where you will find all the relevant KPIs summarized.

Additionally, on the charts tab, a series of charts are presented: sources and uses, construction costs, revenues, expenses, net operating income, debt service, debt balance, debt service coverage ratio, debt yield, internal rate of returns, net present values, cash on cash and cap rate evolution.

Finally, the checks tab, where the most critical checks are aggregated. Whenever you see an error message on any page, you should consult this page to see where the error is coming from.