An alternative to yearly net income for hotels.

EBITDA is a basic measure of profitability and can be used as an alternative to simple earnings or net income for hotels. It could be used to reflect the amount of money available to pay interest, and demonstrates potential profitability when accounting and financing decisions are removed. It could be useful to evaluate businesses with different capital structures, tax rates, and depreciation rules.

How this is calculated

EBITDA is a result of NOI subtracted by G&A for the period of a year. The EBITDA Multiple, which is a user’s assumption by the user, would multiply the resulting EBITDA for calculating total value for hotel floor areas.