Price Per Key
Assess a hotel acquisition on both capital value per room and trading performance.
Introduction
Who this is for: Hotel investors, operators and advisers appraising a trading hotel acquisition.
Why it matters: Price per key is the industry’s shorthand comparable, but it says nothing about whether the hotel makes money. A £95,000-per-key regional hotel is only good value if RevPAR and EBITDA support it. Both tests need to pass.
Typical scenario: An investor is offered a 90-bedroom regional hotel at £8.5m, trading at 72% occupancy and £85 ADR, and needs to know whether that price is supported by the trading performance.
- Comparing price per key across markets without adjusting for RevPAR — a London key and a regional key are not the same asset.
- Valuing on EBITDA before deducting an FF&E reserve, which overstates sustainable earnings.
- Ignoring management or franchise fees when the buyer intends to change operator.
- Using peak-season occupancy rather than a full-year average.
Inputs
Asset & Price
keys
Trading
Operating
Analysis
At £8,500,000 across 90 keys, the price is £94,444 per key.
Trading at 72% occupancy and £85 ADR gives a RevPAR of £61.20 and total revenue of £2,760,420.
After operator fees and FF&E reserve, adjusted EBITDA is £745,313 — an EBITDA yield of 8.8%, or 11.4x earnings.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Live Results
Price Per Key
£94,444
RevPAR
£61
Adjusted EBITDA
£745,313
EBITDA Yield
8.77%