A 62 percent GOP margin on a limited-service hotel deck deserves a second look

Is there a standard for this. It's strange that two people can look at the same hotel and publish margins 20 points apart and both call it GOP.

There is a standard, and it's the reason your rebuild is closer to the market convention. The uniform system of accounts used in hospitality puts gross operating profit after departmental expenses and after undistributed expenses like administrative, sales and marketing, utilities and property operations. Property taxes, insurance, the FF&E reserve and rent sit below GOP by design, so a sponsor presenting GOP before taxes and insurance is following the format. Presenting it before the base management fee is where the convention starts bending, because management fees are normally an undistributed expense and land above GOP.

What you're really flagging is that 62% is impossible for a hotel that pays for housekeeping. A limited-service property with 96 keys and 3.4m of revenue is running roughly 97 dollars of total revenue per available room per night, call it 90 of RevPAR, with a real front desk, laundry, breakfast and utilities. To hit 62% at that revenue level, whole departments have to be absent from the number. So the useful question is not the label. Ask for the full P&L in the standard format, with the trailing twelve alongside the projection, and ask which lines the operator's regional structure absorbs and what the property is charged for that absorption. Regional overhead allocation is a real line and it's frequently invisible.

One more thing to press. If the labor line assumes a regional structure, find out whether that operator is affiliated with the sponsor. An affiliated manager can price its own fee low to make the deal's yield look better, then earn on other agreements you don't see, and the disclosure for that belongs in the offering documents. Your 7.3% versus their 11% is a 3.7 point spread on a 19.2m ask, which is most of the equity return in a cycle-sensitive asset.

That 180k labor adjustment is probably light on an exterior corridor property. Rooms cleaned per housekeeper per shift is the number to ask for, and if they're modeling 18 or 20 on a property with outside walkways and no service elevator, that's a fantasy staffing plan. Also ask what they're paying now versus what the market pays, since wage pressure on housekeeping and front desk has been the line that moves most in operators' actual numbers.