Hotel Revenue Glossary · Financial

IRR (Internal Rate of Return)

The annualized rate of return an investor earns on a hotel investment, accounting for initial capital outlay, annual cash flows (NOI), and eventual sale proceeds. IRR captures the time value of money, unlike simple ROI which does not.

Why it matters: IRR is the benchmark that hotel investors use to compare opportunities. Revenue management performance directly affects IRR through its impact on NOI. A hotel that consistently outperforms its revenue budget delivers higher IRR to its investors.

All glossary terms Capitalization Rate (Cap Rate) NOI (Net Operating Income) Asset Value Per Key