Hotel with Retail Mixed-Use Proforma Calculator

Hotels are operating businesses dressed up as real estate. Their NOI is volatile because RevPAR (ADR × occupancy) moves with the cycle, the market, and management quality. Lenders therefore want wider cap rates and lower LTV on the hotel income — typically 8.0–10.0% caps and 55–65% LTV in 2026. Retail income, by contrast, behaves like classic real-estate income: contractual rent on multi-year leases. It supports a tighter cap rate (6.5–7.5%) and more leverage.

Combining them per-component lets you keep the hotel's higher risk premium where it belongs and not penalize the retail. The combined value is meaningfully higher than what you'd get capping the entire NOI at a hotel-style rate.

Hotel investors and brokers use it for select-service and lifestyle hotels where 1,500–10,000 SF of street-level retail or F&B has its own lease (not operated by the hotel). It is also useful for adaptive reuse — converting historic CBD office towers to hotel with retained ground-floor retail — and for evaluating airport-adjacent and convention-center hotels.

It is not the right tool when the 'retail' is actually hotel-operated F&B or a rooftop bar. Those revenues belong inside the hotel's F&B & Other input on the hotel component, not as a separate retail tenant.

A 90-key urban select-service hotel ($165 ADR, 68% occupancy, $3,200/key F&B and other ancillary) generates roughly $3.69M of rooms revenue plus $288K of ancillary. After standard select-service OpEx of $935K, NOI is about $1.20M. At a 9% hotel cap, hotel value is $13.3M.

The 4,000 SF ground-floor retail leases at $40 PSF base with $10 CAM, 100% leased: roughly $200K EGI, $34K OpEx, $166K NOI. At a 7% retail cap, retail is worth $2.37M. Combined value $15.7M, blended cap 8.7%. At 60% LTV the loan is $9.4M, debt service about $800K at 7%/25, DSCR 1.71× — comfortably bankable.

The biggest mistake is letting hotel F&B income leak into the retail component. Real estate lenders will not cap hotel-operated coffee shop revenue at a retail cap rate; it belongs in the hotel ancillary line and gets the hotel cap rate.

A second mistake is using historical (peak-cycle) ADR and occupancy. Underwrite to a STABILIZED ADR and occupancy that match the comp set's current trailing 12 months, not the trailing 3 months. Lenders will haircut your assumptions if you don't.

Third, watch hotel OpEx ratios. Select-service hotels typically run 60–70% expense ratio; full-service runs 70–80%. If your OpEx implies a 50% ratio, you're missing payroll, franchise fees, or insurance — common omissions on borrower proformas.