Equipment Depreciation Calculator
Calculate straight-line depreciation for hospitality equipment. Determine annual depreciation expense from purchase price, salvage value, and useful life.
Hotel Renovation ROI Calculator
Calculate hotel renovation ROI from ADR increase, room count, occupancy rate, and renovation cost. Evaluate property improvement returns.
%
days
years
Annual Incremental Revenue⧉
$709,560.00
Additional revenue from ADR increase across all occupied room-nights
Annual ROI⧉
183.82%
Annual net benefit divided by annualized renovation cost
Payback Period⧉
3.8 years
Total investment (cost + lost revenue) divided by annual incremental revenue
Total Investment⧉
$2,704,700.00
Renovation cost plus revenue lost during downtime closure
Lifetime Return⧉
$2,971,780.00
Net profit over 8-year useful life after recouping total investment
Lifetime ROI⧉
109.87%
Lifetime return as a percentage of total investment including lost revenue
Cost per Room⧉
$13,333.33
Total renovation cost divided by number of rooms affected
Lost Revenue (Downtime)⧉
$704,700.00
Estimated revenue forfeited while rooms are out of service
Investment Recovery Progress
Recovers in 3.8y
ROI Timeline
| Year | Cumulative Revenue | Cumulative Net | Status |
|---|---|---|---|
| 1 | $709,560.00 | -$1,995,140.00 | Recovering |
| 2 | $1,419,120.00 | -$1,285,580.00 | Recovering |
| 3 | $2,128,680.00 | -$576,020.00 | Recovering |
| 4 | $2,838,240.00 | $133,540.00 | Breakeven |
| 5 | $3,547,800.00 | $843,100.00 | Profitable |
| 6 | $4,257,360.00 | $1,552,660.00 | Profitable |
| 7 | $4,966,920.00 | $2,262,220.00 | Profitable |
| 8 | $5,676,480.00 | $2,971,780.00 | Profitable |
Renovation Type Benchmarks
| Type | Typical Cost/Room | ADR Lift | Expected Life | Avg Payback |
|---|---|---|---|---|
| Cosmetic | $3,000 - $8,000 | 5 - 10% | 3 - 5 yrs | 1.5 - 3 yrs |
| Moderate | $10,000 - $25,000 | 10 - 18% | 6 - 8 yrs | 3 - 5 yrs |
| Major | $25,000 - $50,000 | 15 - 30% | 8 - 12 yrs | 4 - 7 yrs |
| Luxury | $45,000 - $100,000 | 25 - 50% | 10 - 15 yrs | 5 - 9 yrs |
Key Considerations
- ADR increases may take 3-6 months to fully materialize after renovation completion
- Phased renovations reduce total downtime revenue loss but may extend the project timeline
- Consider seasonal timing to minimize occupancy impact during renovation periods
- Guest review scores typically improve 0.3-0.5 points post-renovation, further boosting bookings
- Energy-efficient upgrades may qualify for utility rebates not included in this estimate
Planning notes, formulas, and examples
About the Hotel Renovation ROI Calculator
Hotel renovations — often driven by brand Property Improvement Plans (PIPs) or competitive repositioning — represent major capital expenditures. The ROI depends on how much the renovation increases the Average Daily Rate (ADR) and/or occupancy rate.
This calculator projects ROI by estimating the incremental revenue from an ADR increase across all occupied room-nights over a year. It compares that incremental revenue to the annualized renovation cost to determine whether the investment generates a positive return.
Hotel renovations typically cost $10,000-$50,000 per room for soft goods (furniture, carpet, paint) and $30,000-$100,000+ per room for full renovations (bathroom, systems). The expected ADR uplift varies by market and brand positioning but typically ranges from $5-$30 per night.
When This Page Helps
Hotel renovations are multi-million-dollar decisions with long payback periods. It gives a clear ROI projection to justify the investment to owners, lenders, and brand partners.
How to Use the Inputs
- Enter the total renovation cost.
- Enter the expected ADR increase after renovation.
- Enter the total room count and average occupancy rate.
- View annual incremental revenue, ROI, and payback period.
- Adjust inputs to model different renovation scopes.
Formula used
Incremental Revenue = ADR Increase × Rooms × Occupancy × 365
ROI = ((Incremental Revenue − Annual Cost) ÷ Annual Cost) × 100Example Calculation
Result: 57.7% ROI
Room-nights: 150 × 0.72 × 365 = 39,420. Incremental revenue: 39,420 × $15 = $591,300/year. Annualized cost: $3,000,000 ÷ 8 = $375,000. ROI: ($591,300 − $375,000) ÷ $375,000 × 100 = 57.7%. Payback: $3,000,000 ÷ $591,300 = 5.1 years.
Tips & Best Practices
- ADR increases of $10-$20 per night are realistic for moderate renovations in competitive markets.
- Renovations that also improve occupancy provide a double benefit — model both ADR and occupancy increases.
- Budget a 15-20% displacement cost for rooms out of service during renovation.
- Renovate during low occupancy periods to minimize revenue displacement.
- Brand PIPs are mandatory — calculate ROI to determine if remaining with the brand makes financial sense.
- Consider energy-efficient upgrades (LED, low-flow fixtures) that reduce operating costs alongside the renovation.
ADR Uplift Modeling
The most critical assumption in hotel renovation ROI is the expected ADR increase. Research comparable properties in your market that have recently renovated. Compare STR data for pre- and post-renovation performance. Be conservative — many renovations underperform optimistic ADR projections.
Revenue Displacement During Renovation
Hotels lose revenue during renovation from out-of-service rooms and disruption to operating rooms. Model this displacement: if 10 rooms are offline for 40 weeks, that is 2,800 room-nights lost. At $120 ADR and 72% occupancy, displacement costs approximately $241,920.
Financing Hotel Renovations
Hotels typically finance renovations through FF&E (Furniture, Fixtures & Equipment) reserves (3-5% of revenue), commercial loans, or owner equity. The financing cost (interest) should be included in ROI calculations but is excluded here for simplicity.
Sources & Methodology
Last updated:
Frequently Asked Questions
Soft goods refresh (carpet, paint, linens): $8,000-$15,000/room. Moderate renovation (furniture, lighting, soft goods): $15,000-$35,000/room. Full renovation (bathroom, HVAC, everything): $40,000-$100,000+/room.
A PIP is a brand-mandated renovation requirement. When a hotel changes ownership or renews a franchise agreement, the brand assesses the property and specifies required upgrades. PIPs can range from $500,000 to $20,000,000+.
Typical ADR lifts: soft goods refresh 3-8%, moderate renovation 8-15%, full renovation 15-30%. The actual increase depends on the competitive market, brand repositioning, and pre-renovation condition.
Per-room renovation: 1-3 days for soft goods, 5-10 days for full renovation. A 150-room hotel renovating 10 rooms at a time takes 15-45 weeks depending on scope. Lobby and public areas add 4-12 weeks.
Yes. Rooms out of service during renovation lose revenue. At 150 rooms with 72% occupancy and $120 ADR, each room out of service for 7 days costs roughly $605. Factor this into total project cost for accurate ROI.
Aim for 25%+ ROI with payback under 5 years. Mandatory PIPs may have lower ROI but are required to maintain franchise status. Discretionary renovations should target 40%+ ROI to justify the capital and disruption.
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