Industry Terms – The Letter E & F

TrevPAR World - Industry Terms

EBITDA – earnings before Interest, taxes, depreciation, and amortization – similar to NOI, but excludes deductions for reserve for replacement; = NOI + Reserve for Replacement.

EB-5 – an immigration program that provides a method of obtaining a U.S. visa by investing  in the U.S. and creating new jobs within specified Regional Centers defined by the government; if a foreign investor develops a hotel and creates new jobs in these areas of the U.S., their family members have an easier process of obtaining visas; essentially, they’re buying their way into the U.S.

Equity – the property value attributed to the owner; often this is the cash invested in the property; = Value – Debt

Extended Stay – Extended-stay hotels focus on attracting hotel guests for extended periods of time, typically more than five consecutive nights. These hotels quote weekly rates.

Financial Distress – A condition in which a company can’t meet, or has difficulty paying off, its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns. A company under financial distress can incur costs related to the situation, such as more expensive financing, opportunity costs of projects and less productive employees. A company’s cost of borrowing additional capital will usually increase, making it more difficult and expensive to raise the much-needed funds. To satisfy short-term obligations, management might pass on profitable longer-term projects.

FIT – Free and independent travel, or business that is not part of a package or group.

Focused-Service Hotel – see definition for limited-service hotel

Food & Beverage Revenue (F&B) – Revenues derived from the sale of food (including coffee, milk, tea and soft drinks), beverages (including, beer, wine and liquors), banquet beverages and other F&B sources. Other F&B sources include meeting room rentals, audio-visual equipment rentals, cover or service charges or other revenues within the food-and-beverage department (includes banquet services charges).

Foreclosure – A situation in which an owner is unable to make principal and/or interest payments on its mortgage; so the lender, be it a bank or building society, can seize and sell the property as stipulated in the terms of the mortgage contract. In some cases, to avoid foreclosing on a property, creditors try to make adjustments to the repayment schedule to allow the owner to retain ownership. This situation is known as a special forbearance or mortgage modification.

Franchisor – a company that sells franchises.

Franchisee – an individual or company buying or leasing a franchise.

Full-Service Hotel – Full-service hotels are generally mid-price, upscale or luxury hotels with a restaurant, lounge facilities and meeting space as well as minimum service levels often including bell service and room service. These hotels report food-and-beverage revenue.

Furniture, Fixtures and Equipment – often referred to as FF&E, these are the hard-good items found in a hotel.

Funds From Operation (FFO) – used  by REITs to define cash flow from overall operations; includes deductions for depreciation and amortization

Author: Derek Martin 

Source – Hotel News Now

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