Collaborate on Hotel Bill Template for Research and Development with Ease Using airSlate SignNow

Hotel bill template for Research and Development

hi there if you are a hotel developer and you are looking to create a set of financial projections for a potential uh investor or lender in your hotel development uh then you've come to the right place because we have built a financial projection template uh built specifically for hotel developers and I'm going to walk you through how the template Works how to fill it out but before I do that just a little bit of background my name is Adam hooka I'm the co-founder of projection hub and we we help Founders create Financial projection for potential investors and lenders we have about 100 different industry specific Financial projection templates for all sorts of different Industries but today specifically focus on our hotel developer template I put a link in the description of the video below to the template so you can grab that and follow along as you create your own projections and this is a pretty sophisticated template I'm going to walk through it step by step but as a thank you if you are willing to stick around to the end of the video we're going to give you access to a coupon code that you can use to get a discount on this particular template uh as our thank you for sticking around so with that why don't we go ahead and dive into how this works okay so we are on the add a glance tab here this is kind of the end of the process so once you've created all of your projections filled out all of the assumptions you're going to come to this add a glance tab where you see some key charts and tables and some key ratios we will also we'll just kind of walk through some of the different deliverables here so you'll also get a 10year cash flow statement projected cash flow statement a 10-year balance sheet a 10-year projected income statement and then you're actually going to get the cash flow income statement and balance sheet all broken down by month for each of the 10 years so if you need that monthly detail you'll have that level of detail the other thing I want to show here at the beginning here is our distributions tab so this is a way to kind of understand some basic investor return opportunities investor distributions so what it does is it pulls in kind of your cash flow projections here it allows you to put an assumption about what percentage of the cash that you have are you going to keep as a reserve versus what percentage will be eligible for distribution to investors so you can you can set those assumptions here for cash reserves and then you can set sale assumption so let's say we're going to sell this property after 10 years of operations and it's the model is going to look to see what's the operating income in the sale year what's that net operating income look like and then what's the desired cap rate or what's the expected cap rate that you think you're going to be able to sell the property for that will give you a gross sale proceeds and then you'll pay off the outstanding debt at that time which will give you net sale proceeds so in this example we've got net sale proceeds of 26 million with a total Equity investment of 9.2 million and so if if all of that Equity or if if the that investor owned 100% of the the business and got 100% of the distributions which are shown here then we can see what the internal rate of return would look like for that investor so irr 15.9% you can also see what annual cash on cash returns would look like as well based on those assumptions okay so we have a bit of work to do though in order to fill the model out to to get it to this point so I'm going to go back now to the input tabs and kind of walk you through how to fill this out so the first thing you need to know is that any assumption or any field that's highlighted in blue is an assumption that you can change without breaking something in the model so we've got a projection start month here January 1st and we can put in the different room types that we'll have and so I do have the Assumption here so let's say you have you know standard room a a double Queen a single King a double King so and a suite and then you can put in the number of units that you have now let's say your hotel also has a restaurant and a spa for example and you are uh renting out those spaces to to to an operator to a restaurant that's operating out of the hotel right so you just own the real estate you're not operating the restaurant you're renting that space out so in that case what You' do is you'd put in the square footage of the restaurant and the spa and we kind of need to get this into this average daily rate idea for the restaurant and Spa because that's what's going to make sense for us on the hotel side so so for the standard room we're saying hey the standard room is 3 sare ft with an average daily rate of $150 and that's that would be you know if if you're at full capacity right so we're going to get to vacancy rates here in in a minute so average daily rate of 150 for the standard room and so that's all going to make sense to you on the on the hotel side it's just a little bit more complicated on the on the restaurant side essentially what you need to do is think about the square footage come up with an average daily rate for that unit and really what this is going to calculate here is your monthly Revenue per unit so you can play around with this assumption until you get the rent where you want it to be so if you want to charge a restaurant 9,125 a month and it's 5,000 squ feet you got to put in you know $300 for the daily rate will help you get to that monthly monthly rent okay you can also put in a completion month so this is a de a new development right and so this is going to include the construction period And so what we're showing here is that these units are going to be ready they're going to be completed and ready to start renting out in month 17 let's say that's when construction's completed and then the first rental month is month 18 for for the hotel rooms and month 21 for the restaurant and the spa and then you can set an assumption here months to rent all units and so the idea here would just be that let's say you open and maybe all your rooms aren't actually ready yet maybe the public doesn't need to know that but maybe you know you've got you've got you know most of the rooms ready and so you actually open it and it's going to take two months before all the rooms are actually available to rent so that's the idea here you can always just put one in for this assumption if you think you know these rooms are going to be ready to rent right away that's great okay here we can put in assumptions about additional Revenue per unit per month so let's say you offer parking and I put in a little equation up here so let's say it's $25 a day for roughly 30 days a month so maybe seven per unit is is kind of the potential Revenue there for parking and then on the room service side maybe it's maybe it's 20 $20 time you know 15 days per month so maybe you think hey you know we're not everyone's going to get room service so we don't want to say the potential is to $20 of room service every single day so you can put in assumptions there as well okay now down here we can we can set an annual price increase so this is this assumption is going to increase the the average daily rates and then you can set vacancy rates so this is vacancy rates for all room types this includes if you put if you put a restaurant or spa or any other type of space that you're leasing out other than rooms you need to keep in mind that this vacancy rate is for kind of all square footage all units so just keep that in mind so we've got that at a 35% and then going down to 30% by year six and kind of leveling out there here you can select a percentage of of tenants or customers maybe you should call that customers the generator so percentage of customers that generate additional Revenue so this is just saying yeah 75% of our customers are going to pay for parking 50% of our customers are going to pay for room service so you can apply those percentages on a on a item by item basis and then the rest of this is really just calculations it's going to calculate you'll see starting there in month 18 you'll see rent start to to come into play okay next we'll go to our input operating expenses tab so you can set a number of different expense categories here and then you can put the specific expenses here and you'll just want to categorize them with this drop down so you know you might have maintenance interior maintenance and an exterior maintenance and Lawn Care and Landscaping it's all in the maintenance category so you'll select the maintenance category you can select a cost driver so this is pretty useful where you can say okay this this expense is going to be an expense for the entire property like marketing is not marketing for this particular room it's marketing for the the whole hotel right and so we're going to spend what we're showing here is starting in month 18 going through month 120 through the end of the model we're going to spend $500 a month on marketing for the entire property but you can have other expenses that maybe are more scale with uh square footage so maintenance could be an idea it could be maybe that makes sense as a per square foot expense you might also think it makes more sense as a per unit maybe there's a maintenance cost per room or per unit per month that you can use cleaning here is a is a good example of a per unit cost so what I did is I just took a $25 a day times roughly 30 days a month to come up with a $750 cleaning cost per per month per unit is what's going to be applied here is the default of course you're going to be able to put in your own your own assumptions here you've got utilities on a per unit basis as well and so on you also have the ability to put in some expenses down here as a percentage of Revenue so let's just say you know like well we know we're also going to have some costs for accounting and maybe running payroll and HR and you know you just you don't know exactly what those are going to be you want to lump them into like here's our general and admin expense bucket and we can set that as a percentage of Revenue so can set that to 7% of Revenue or 5% of Revenue and it will scale as Revenue scales one more thing to mention here is that you can set a reserve for Replacements so you might want to set aside some cash because this is real estate and you know it someday you're going to need a new roof someday you're going to need new paint you're going to need new windows those sorts of things and so if you want to set aside make sure you're setting aside cash for Replacements you can do that with this assumption here on the salary and wages tab you have the ability to put in salaried positions so let's say we've got a facilities manager maybe maintenance staff Hotel manager front desk staff so I'll mention on the front desk staff as a good example here you can say okay they're starting in month 18 in the model and there's actually going to be four of this particular type of employee so there'll be four front desk staff at this annual salary with this expected annual raise okay so there is now an input financing Tab and an input construction budget tab I'm going to actually start with the construction budget these two Tabs are going to play kind of back and forth with each other so what you can do here is you can enter in your different kind of budget for construction and you can enter in these costs as a per unit amount and then apply the number of units that this is going to be related to so for example here I said it's a $275,000 cost per unit and we're going to apply it to all 102 units so you can see how many units you have right here and again that is ultimately coming from the number of units you put in here on the input Revenue tab so we're we're saying this cost is going to be applied 275,000 per unit for a total cost of 28 million now you can set when that money is going to be spent and so we can say it's going to start we're going to start spending that money in month 6 and end in month 12 of the model and the and the model will just evenly spend that 28 million over that that month 6 to month 12 you also can put in Land Development and here's an example where you're not going to have a land cost on a per unit basis you're going to have kind of a total cost so this is a per property amount so $2 million for the Land Development and then you might have some situations where you have a bit of both so let's say it's $11,000 per unit for painting for all 102 units but also just $50,000 in a per property amount because you've got you got to paint the lobby and you got to paint the exterior for example and that's not tied to a particular unit so you can enter in those costs that way so all of once you get all of that in you're going to have a total development cost here you can see a cost per unit and a cost per square foot Okay so we've set what we hope our construction budget's going to be and now we need to go back to the financing Tab and see if we can actually make this project work can we make it pencil can we actually afford that construction budget and so the way that we do this is we start by saying what is the desired or required debt service coverage ratio that your lender is likely to require and so let's say your lender says we require a debt service coverage ratio of 1.25 and so what that means is that you need to have a125 of net operating income essentially profit or cash flow for every dollar worth of Debt Service your principal and interest payments in order for them to approve the loan so they they want you to have projected net operating income of a125 for every dollar of debt service so what we do is once we've created these projections the model is going to tell us okay once your once the properties stabilized once it's built and fully kind of operating it'll it'll then check to see okay what's your monthly net operating income and so right now it's projected to be 209,000 roughly 210,000 here in net operating income which means in order to keep a 1.25 debt service coverage ratio you can afford a maximum monthly loan payment of $167 ,000 here and that then we can set assumptions about our interest rate and our term on the loan so if we expect to be able to get a 5.75 interest rate over a 30-year term with $167,000 monthly payment the model is able to tell us okay you're going to be able to borrow based on all those assumptions $28 million 28785 there and then we can set an assumption about what we want our our debt equity ratio to be so if we say 3 to one so $3 of debt for every dollar of equity then it tells us what our Target Equity amount is 9.5 million for a total kind of Maximum debt and Equity financing here of 38 million okay so then the rest of this is is going to it's going to pull in what our construction budget is it's going to pull in financing costs it's going to tell us how much working capital will be available and how much it thinks is needed and so right now it's saying hey you don't have enough working capital now you might you might say well the model thinks I need 1.6 million I'm actually okay with with living with 940,000 or you might go back and say okay we need to have a 1.6 million of working capital so we've got to cut some expenses somewhere in the construction budget right okay so then here you're going to enter in your Equity sources so let's say maybe maybe you bought the you bought the plot of land and you put in $200,000 for the land already and so that was already invested in month zero and then you're going to raise an additional Equity investment of 9 million coming in in month four and then you're able to put in your construct debt right here in this box so you put in your construction debt or construction loan with your expected interest rate for the construction loan only and then whether you're going to pay interest payments on that and what month the interest payments will start now this box up here is going to assume that hey you're going to have you know this is these are some big loans and you're going to have loan financing costs closing costs inspections for kind of each time you you take out a loan so for the construction debt piece you're going to have closing cost and then this may not be relevant you may not have kind of mini permanent debt but in some cases particularly in like multifam you might have construction debt then you might refinance to manyi permanent debt for some period of time and then you might refinance again to something more permanent a permanent debt and so you might end up with kind of three three loans in that in that process so if you do you can you can put in those financing costs and the you know tie them to each particular loan here and the amounts so that ties down to this refinancing section so what the refinancing section is going to do you can put in the name the mini permanent debt or permanent debt what month you expect to refinance this will tell you what the debt balance will be at that refinance point and then how much new debt you can put in how much new debt you're going to take out so let's say you want to take out more than 28 million because you you want to also Finance some of the closing costs and then you've got 6.25% interest rate over over 360 months and then maybe after another 30 months you you're able to refinance again at even a lower rate at 5.75 so perhaps you do that again so that's that's kind of the idea on the financing here and so ultimately what you're going to want to do is once you get this filled out to really see does this work you want to come to your cash flow statement and I would look at your monthly cash flow statement and so what we see here is we do we are seeing like a negative cash balance a bit of that could just be timing you know like in the model you're starting to spend on Capital expenditures right in month one but we're saying that the equity 9 million Equity didn't come in until month 4 so you might want to look at that and say no we really need the equity to come in be in the bank account in month one in order to cover those first few months and then basically the model is going to draw on the loan it's going to use your Equity first then it's going to start drawing on the loan and then once you are operating what you're going to want to see you can see here Revenue starts to come in but look we we're negative we have a negative cash balance so that's why the model in the in the financing tab here was saying oh you don't have enough working capital you don't have enough working capital it thinks you need 1.6 you only have 940 now we can see why that's a problem because we're yeah we're about 600,000 short here so that's why it wanted you to have some more working capital so you might raise more debt you might raise more Equity you might cut your construction cost by 600,000 or something to have sufficient working capital there but that's what you're going to want to look at and ultimately make sure that your cash balance is not negative at any point so that is really the basis of this model there's a lot here I know it's kind of complicated and and sometimes difficult to get the project to to pencil out and so if you have questions feel free to reach out tell me about your situation I can try to try to help you with that um you can email us at support projection hub.com to get any help and then also just as I had mentioned at the beginning of the video as a thank you for sticking around to the very end here wanted to to give you access to a coupon code so if you go to the description of the video below you're going to find a link to a form to fill out to get that coupon code so it'll when you fill that form out it's going to give you access to our most upto-date uh coupon codes you can make sure you get one that actually works and and then use that at checkout as our thank you for sticking around to the end again if you have any questions at all please don't hesitate to reach out at support projection hub.com thanks [Music] [Applause]