Calculator
Hotel debt yield calculator
Debt yield is a property's annual net operating income divided by the loan amount, expressed as a percentage. For a hotel it answers a simple question: if the lender had to take the property back, what return would the loan earn on income alone? Conduit (CMBS) lenders set a minimum debt yield by hotel type, and it often limits proceeds before loan-to-value does.
Results are indicative estimates for discussion. They are not a loan offer, a rate quote or a commitment to lend. Nothing you type here is sent anywhere; the math runs in your browser.
How it works
Enter keys, average daily rate, occupancy and trailing-12 net operating income (after the FF&E reserve), then the loan you are considering. The calculator multiplies ADR by occupancy for RevPAR, multiplies RevPAR by keys and 365 for rooms revenue, and divides NOI by the loan for debt yield.
It then tests the loan against the three limits Corin assumes for hotel CMBS: a debt yield floor that depends on hotel type (11.0% premium flag, 12.0% economy flag, 12.5% boutique or independent), a 1.40x coverage minimum on a 30-year amortization at the rate you enter, and a 65% maximum loan-to-value if you provide a value. The smallest of the three is the binding constraint.
Reading the result
A debt yield below the floor means a smaller loan, more NOI, or a different structure. Bridge and SBA programs use different tests, so a hotel that misses the CMBS floor may still fit another box.
The 10% NOI swing shows how fragile the margin is. Hotel income moves with demand, so lenders pay close attention to the trailing-12 trend.
Frequently asked questions
What is a good debt yield for a hotel loan?
In Corin's CMBS assumptions the floor is 11.0% for premium-flag hotels, 12.0% for economy-flag hotels and 12.5% for boutique or independent hotels. Individual lenders vary.
How is debt yield calculated?
Divide annual net operating income by the loan amount. A $1.8M NOI on a $15M loan is a 12.0% debt yield.
Why do CMBS lenders use debt yield?
It ignores interest rate, amortization and cap rate, so it compares loans on income and balance alone. That makes it a steadier test than coverage when rates move or when values are uncertain.
What is RevPAR?
Revenue per available room: average daily rate multiplied by occupancy. A $150 ADR at 70% occupancy is a $105 RevPAR.
What if my hotel misses the floor?
Options include a smaller loan, a bridge loan while income stabilizes, an SBA 504 structure for an owner-operator, or a PIP bridge for a hotel being renovated. An advisor can compare them.
Related financing
- Hotel CMBSFixed-rate, non-recourse conduit debt for stabilized hotels.
- PIP bridgeFloating, interest-only debt to complete a franchise renovation before a permanent takeout.
- SBA 504 hotel loansBank first lien plus a 25-year fixed CDC debenture for owner-operated hotels.
- Hotel financingSBA, CMBS and bridge options for hotel owners and buyers.
Terms used here
- Debt yieldDebt yield is a property's annual net operating income divided by the loan amount. Unlike coverage, it does not depend on the interest rate or amortization, so lenders use it as a second check on how much income stands behind each dollar of loan.
- Revenue per available roomRevenue per available room is a hotel's rooms revenue divided by the number of rooms available, which equals average daily rate multiplied by occupancy. It is the standard measure of a hotel's performance against its competitive set.
- Average daily rateAverage daily rate is a hotel's rooms revenue divided by the number of rooms sold. It measures price, while occupancy measures volume; multiplied together they give RevPAR.
- Property improvement planA property improvement plan is the list of renovations a hotel franchisor requires when a property changes hands, is renewed or converts to a new brand. A PIP bridge loan funds the purchase and the planned renovations together, sized on cost, until the hotel can refinance.
- Commercial mortgage-backed securitiesCommercial mortgage-backed securities are bonds backed by a pool of commercial mortgages. A CMBS (conduit) loan is originated to be pooled, is usually non-recourse apart from standard carve-outs, and is typically fixed-rate. Corin's hotel assumptions are a 10-year term, 30-year amortization, up to 65% loan-to-value and a minimum 1.40x coverage.
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Send the basics and a licensed Corin advisor reviews which programs and lenders may fit, or size the loan yourself first.