Hotel Operating Statements and Underwriting in Alberta

1. Define the underwriting question and period

Set whether the work supports pricing, acquisition, financing, recapitalization, renovation or operator selection. Choose monthly and annual periods that capture seasonality and include enough history to explain abnormal closures, renovations or demand events.

State the legal entity, property, departments and accounting basis included. A brokerage model is not an audit, review engagement, quality-of-earnings report, appraisal or lender commitment.

• Decision and users
• Periods covered
• Property and entity scope
• Reported versus adjusted
• Capital assumptions
• Professional reliance

2. Reconcile available room inventory

Start with approved and physically existing rooms, then reconcile rooms available for sale by day and month. Separate permanent room count from rooms out of order, under renovation, used by staff, committed long term or otherwise unavailable.

Occupancy should use the stated occupied-room and available-room definitions for the same period. A changed denominator can improve a ratio without improving revenue or property condition.

3. Test occupancy, ADR and RevPAR

Calculate average daily rate from room revenue and paid rooms sold using a consistent definition. Calculate revenue per available room from room revenue and available rooms, or reconcile it to occupancy multiplied by ADR when definitions align.

Disclose complimentary rooms, house use, no-shows, cancellations, taxes, resort or destination fees and other amounts excluded from room revenue. Compare source-system reports to the general ledger and financial statements.

4. Segment demand and revenue quality

Break room demand into meaningful transient, corporate, group, government, crew, wholesale, online-travel-agency and other segments where records support it. Test rate, cancellation, commission, contract term and concentration.

Separate recurring base demand from one-time events, emergency displacement, project crews or owner relationships. A forecast should not capitalize temporary demand as permanent without support.

5. Reconcile other operated departments

Review food and beverage, meetings, parking, laundry, retail, recreation, vending, tenant and other revenue with its direct costs and operating requirements. Confirm whether outlets are owned, leased, managed or contracted.

A gross revenue line does not show contribution. Identify closures, restricted hours, licence dependencies, labour requirements and capital needed to maintain each department.

6. Normalize operating expenses carefully

Organize rooms and other departmental expenses, administrative and general, sales and marketing, repairs and maintenance, technology, utilities, insurance, property tax, management fees, franchise and reservation costs and other undistributed expenses.

Reconcile owner compensation, related-party charges and costs paid outside the property entity. Replacement cost, buyer scale and proposed management changes are scenarios, not corrections to reported history.

7. Treat tourism levy and GST as reconciled flows

Alberta requires qualifying temporary-accommodation operators to register, collect, report and remit the tourism levy under current rules. The province states a 6% rate applies to qualifying bookings after March 31, 2026, subject to transitional and exception rules.

CRA generally treats hotel accommodation as taxable for GST/HST, with specific exceptions. Reconcile taxes and levies collected, revenue presentation, returns, assessments and liabilities with tax professionals instead of treating collected amounts as operating revenue.

8. Build the capital and PIP schedule

Separate maintenance expense, completed capital, committed work, deferred maintenance, furniture-fixtures-and-equipment replacement and potential franchise PIP requirements. State source, timing, contingency and whether rooms will be displaced during work.

A reserve for replacement is a modelling input, not evidence that the building is current. Coordinate property-condition, engineering, brand and operator reviews.

9. Bridge reported operations to transaction cash flow

Show every adjustment from reported departmental and operating results to the selected cash-flow or earnings measure. Keep management fees, franchise costs, reserves, property tax, insurance, ground rent, owner items and financing below or above the line consistently.

Use scenario ranges for occupancy, ADR, expenses, capital, renovation downtime and stabilization. Do not describe a scenario as a forecast unless the assumptions, preparer and intended use support that label.

10. Connect operations to property value without overstating certainty

Income analysis can consider supportable stabilized cash flow and a market-derived yield or discount framework, while sales comparison and replacement evidence may provide additional context. Transaction, physical, franchise and operating risks affect the inputs.

Municipal assessment, asking price, brokerage analysis and appraisal are different conclusions. This guide is educational and is not accounting, audit, tax, appraisal, investment, franchise, engineering or financing advice.