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Key Metrics for CMBS Hotel Loans


1. Net Operating Income (NOI)

NOI is a crucial metric for evaluating the operational performance of a hotel property. It represents the total revenue generated by the hotel, minus its operating expenses. This figure is important for CMBS lenders as it demonstrates the property's ability to generate sufficient cash flow to service the mortgage debt. A higher NOI indicates stronger profitability and a lower risk profile for the lender.

2. Revenue per Available Room (RevPAR)

RevPAR is a widely used metric in the hotel industry that combines occupancy and average daily rate (ADR) to provide an overall measure of a hotel's revenue-generating ability. Tracking changes in RevPAR over time can give CMBS lenders insight into the property's performance trends and its competitiveness within the local market.


3. Occupancy Rate

The occupancy rate represents the percentage of available hotel rooms that are sold during a given period. This metric is important for CMBS lenders as it demonstrates the property's ability to attract and retain guests, which is a key driver of revenue. A consistently high occupancy rate can indicate a well-managed hotel with strong market positioning.


4. Average Daily Rate (ADR)

ADR is the average room rate charged by a hotel, calculated by dividing total room revenue by the number of rooms sold. This metric is crucial for CMBS lenders as it reflects the property's pricing power and the perceived value it offers to guests. A higher ADR can translate to stronger profitability and a lower risk profile for the lender.


5. Revenue Generating Index (RGI).

RGI is a metric that compares a hotel's RevPAR to the RevPAR of its competitive set. A RGI above 100 indicates that the hotel is outperforming its competitors, while a RGI below 100 suggests underperformance. CMBS lenders can use this metric to assess the property's market position and its ability to generate revenue relative to its peers.


By closely monitoring these key performance indicators, CMBS lenders can gain a comprehensive understanding of a hotel property's financial health and its ability to service the mortgage debt. This information is crucial in the underwriting process and can help lenders make informed decisions about the risk profile of the investment.

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