Reforecasting a hotel acquisition after the final brand PIP

The initial case carries a four-month guestroom and public-area renovation. Of 78,110 annual physical room nights, 4,800 are out of order, leaving 73,310 saleable. The hotel sells 55,000 room nights at a $176 ADR. Occupancy on saleable rooms is 75.0%, RevPAR is $132.04 and rooms revenue is $9.680 million.

The $4.8 million budget covers guestroom finishes and bathrooms, lobby work, a roof allowance, limited elevator and MEP work, life-safety items, signage and contingency. It follows the preliminary brand list and the seller's renovation estimate.

The final brand inspection and property reports expand both scope and sequence. Full roof work replaces the allowance. Both elevators enter the schedule. Fire, accessibility and building-system items increase. The revised room-block plan keeps floors out of inventory through July and raises out-of-order room nights to 12,600.

The room schedule is rebuilt from physical keys rather than by applying a renovation discount to occupancy. A room leaves saleable inventory on the date it is blocked in the PMS and returns after the work, brand inspection and housekeeping release. The revised schedule carries 1,800 to 2,200 out-of-order room nights per month through May, then returns inventory during June and July.

The hotel sells 49,400 room nights in the revised case at a $174 ADR. Occupancy on the smaller saleable inventory is 75.4%. RevPAR is $131.21. Those operating metrics remain close to the initial case because demand is concentrated into fewer available rooms; they do not restore the room nights removed by construction.

The same schedule drives food, beverage, parking and other occupied-room revenue. It also identifies the dates on which housekeeping labor, linen, utilities and channel costs flex. Fixed staffing, franchise charges, insurance and property taxes do not receive the same room-night adjustment.

The final scope adds $1.15 million to guestrooms and bathrooms after the sample-room review. Roof and envelope work increases by $500,000. Elevator and MEP work increases by $450,000. Life-safety and accessibility items add $350,000 beyond the preliminary allowance.

Public areas, signage and property systems add another $500,000. The longer schedule and larger hard-cost base increase soft costs and contingency by $400,000. The revised budget is $8.15 million before any owner-elected work outside the PIP.

The PIP cost and the operating displacement remain separate model lines. Paying $3.35 million more does not capture the $1.264 million revenue reduction during construction. Likewise, the lower Year 1 NOI does not fund the incremental roof, elevator or guestroom scope.

Revised rooms revenue is $8.596 million. Food, beverage and other revenue falls from $1.650 million to $1.470 million, producing $10.066 million of total revenue. Departmental, undistributed and fixed expenses decline by $484,000 as occupied-room costs flex, leaving $3.750 million of hotel EBITDA.

The FF&E reserve is calculated on the revised revenue rather than copied from the initial case. At 4%, it falls from $453,000 to $403,000. That reduction is not treated as operating improvement; it follows the smaller revenue base. Year 1 hotel NOI falls from $4.077 million to $3.347 million.

The model can carry a post-renovation ADR and occupancy benefit after rooms return. It does not move that benefit into the construction months. The final PIP case therefore contains both the Year 1 disruption and the later stabilized case rather than netting the expected uplift against current displacement.

At the $58 million purchase price, the initial NOI produces a 7.03% going-in yield. The $34.8 million loan is constrained by 60% LTV and opens at an 11.72% debt yield.

The final PIP NOI produces a 5.77% Year 1 yield. At 60% LTV, debt yield is 9.62%, below the 11.0% minimum. Debt yield sizes proceeds at $30.427 million, adding $4.373 million to purchase-price equity. The larger PIP adds another $3.35 million. Price equity plus PIP reaches $35.723 million, $7.723 million above the initial case.

The construction sequence remains a case variable. An accelerated schedule spends more to return rooms sooner. A demand-phased schedule moves closures away from compression dates. An extended elevator or roof sequence adds room nights and carry. Each treatment begins with the same final required scope.

Cap Orbit can work across the franchise agreement, preliminary and final PIPs, property-condition and life-safety reports, contractor bids, renovation schedule, PMS room inventory, daily operating history, departmental statements, management agreement, debt quote and existing acquisition workbook in the same deal. The required scope can be reconciled to the cost budget and the rooms affected by each workstream.

From there, you can have Cap Orbit rebuild saleable room nights by day or month, carry ADR and occupancy against the available inventory, flex the appropriate departmental costs, recalculate the FF&E reserve and update the debt and equity case in the existing model. Every PIP item, room block, rate and operating line retains its source trace.

The same deal record supports the renovation cases that matter here: five, seven or nine months; phased public areas; overlapping guestroom floors; or a different room-return sequence. Each case returns the same connected outputs—available rooms, occupied rooms, ADR, RevPAR, rooms revenue, hotel NOI, PIP cost, loan proceeds and equity.

That is the standard for AI on this asset class. The useful result is not a PIP summary or a stable RevPAR observation. It is an acquisition case in which required scope, room availability, operating statements, reserves and financing resolve into the same renovation schedule.