This sheet will include tables showing the history and forecast for each element in the chart of accounts. Much of the information is based on the work done in previous sheets.

We will review the following sheets in this guide: 

1. Departmental Revenue + Associated Expenses
2. Undistributed Expenses
3. Fixed Expenses
4. Itemization for your Variability Conclusions 

Pre-Requisites 

1. Subscription Tier: 
   • Enterprise: Included with the Subscription fee
   • Professional: Available as an Add-On
     • Please contact the Client Success Manager if you want to upgrade your subscription to access the Valcre Hospitality Workbook and Word Report template. 
2. Downloaded Hospitality Template from Valcre Online.
3. Set up the Hospitality Valuation Workbook & complete all previous sheets. 

Table of Contents

1. Video
2. How-to Guide
   • Departmental Revenue & Expenses
   • Undistributed Expenses
   • Fixed Expenses
   • Fixed Variables

 

Video

 

How-to Guide 

Departmental Revenue & Expenses

Step 1: Access the Departmental Revenue & Expenses sheet by selecting HOTELDEP from the bottom menu. 

These tables are set up with a default setting; however, they are flexible to allow you to adjust how you want to do your analysis. Each section is aligned with the revenue and expense, allowing you to see all the necessary information in the same window.

Step 2: Enter the projected Growth - the rate of growth for the Fixed factor

The factor you enter here is the rate of growth you are forecasting for the room’s revenue.

Pro-tip: This is set to traditional estimates; you can adjust this as needed by typing your forecasted factor directly into the yellow box

 

Step 3: Enter the Fixed percentage - the percentage of rooms affected by the Growth factor.

In our example pictured below, we are saying that 30% of the rooms expense is fixed, and will grow at 2% (GROWTH)

Variable - this figure will represent the balance of the fixed estimate and, together, should equal to 100%.

Step 3: Select the Var Index option - This is the revenue item that determines how much the variable portion of the expense will grow or contract.

Step 4: Select the Basis option - This item gets estimated. You can select a dollar amount or enter your estimate as a percent of some revenue. 

Step 5: Input the Rooms Expense Basis Conclusion 

This will be your actual estimate for this element in the chart of accounts going forward.

• I.E: If the expense is 30% of the revenue generated by the Rooms, then make sure you chose the % of Room as the Basis and enter .70 in the yellow space.

Step 6: Repeat the above steps with each applicable section, noting that several sections will have a Growth, Fixed, VAR, VAR Index, and Basis for both the Revenue and Expense tables. 

Step 7: Review the Total Gross Revenue, Total Departmental Expense, and Departmental Profit tables.

Step 8: Add your summary of conclusions or provide context to the reader about items in the tables using the blank yellow box at the start of each table. (Optional)

 

Undistributed Expenses

Step 1: Access the Undistributed Expenses sheet by selecting HOTELUND from the bottom menu.

The items entered on these tabs are a default; most will rely on a percentage of total revenue as the basis for the total estimate. The growth factor is defaulted to an average of CPI, and the fixed factor is based on traditional estimating by hotel analysts. You can edit as you see fit by typing directly into the cells. 

Step 2: Complete the tables following the same process as you did for the above-mentioned Departmental Revenue & Expenses sheet. 

Step 3: Review Total Undistributed Expenses and Gross Operating Profit tables

Step 4: Add your summary of conclusions or provide context to the reader about items in the tables using the blank yellow box at the start of each table. (Optional) 

 

Fixed Expenses

Step 1: Access the Fixed Expenses sheet by selecting HOTELFXD from the bottom menu.

Step 2: Complete the tables following the same process as you did for the above-mentioned Departmental Revenue & Expenses sheet. 

Real Estate Taxes table - Set the Basis to equal the tax number. 

Property Insurance table - The basis can be set at a nominal amount. Consider looking at your previous years or your borrower's Pro Forma if it is reasonable or comparable. 

Step 3: Review the Total Fixed Expenses and Net Operating Income tables

Step 4: Add your summary of conclusions or provide context to the reader about items in the tables using the blank yellow box at the start of each table. (Optional)

 

Fixed Variables

Step 1: Access the Fixed VS. Variable sheet by selecting FXDVAR from the bottom menu

This sheet will be filled out using the information entered into the Departmental Revenue & Expenses, Undistributed Expenses, Fixed Expenses & Fixed Variables tables.

 

Once you have completed all necessary information in the Departmental Revenue & Expenses, Undistributed Expenses, and Fixed Expenses sheets, you can move on to the Direct Capitalization and DCF sheets in the Hospitality Workbook. 

For additional questions about using the Departmental Revenue & Expenses, Undistributed Expenses, Fixed Expenses, and Fixed Variables sheets in the Hospitality Valuation Workbook, please get in touch with Valcre Support using the Online Chat using Valcre Online or Valcre Mobile.