Hotel Revenue Glossary · Financial

Asset Value Per Key

The total market value of a hotel property divided by the number of guest rooms. This metric normalizes property values for comparison across hotels of different sizes. A 300-room hotel valued at $75 million has an asset value of $250,000 per key.

Why it matters: Asset value per key is the real estate metric most commonly used in hotel investment. Revenue managers who understand this concept appreciate how their daily decisions compound into property-level value creation — or destruction.

Worked example: A 180-room hotel valued at A$54 million is worth A$300,000 a key. Lift RevPAR by A$6 — say A$102 to A$108 — and at 75% flow-through on 65,700 available room nights that is A$295,650 of extra NOI. Capitalised at 7%, that is A$4.22 million of value, or A$23,464 a key, taking the property to A$323,464. The same six dollars a night, restated in the language the valuer speaks.

Common mistake: Comparing per-key values across properties without matching the room product. A 180-room hotel of 22-square-metre rooms and a 180-room hotel of 45-square-metre suites are not comparable at A$300,000 a key, however similar the arithmetic looks. Per key normalises for room count only — never for room size, land, or condition.

All glossary terms Capitalization Rate (Cap Rate) NOI (Net Operating Income) IRR (Internal Rate of Return)