EBITDAR in Hotels: A Comprehensive Guide

What Is EBITDAR and Why It Matters to Hoteliers

If you're a hotelier operating multiple properties—or running an asset-light business with leased properties—EBITDAR is your go-to metric to assess profitability accurately.

EBITDAR stands for Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent/Restructuring.

Unlike basic profit figures, EBITDAR gives you a clear view of core operational performance, eliminating variable factors like rent and location-based tax rates that distort comparisons.

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This makes it a preferred metric in the hospitality industry, where rent structures, ownership models, and regional tax rules differ drastically.

Recent industry performance confirms the value of this metric. For example, IHG Hotels & Resorts reported an adjusted EBITDA of $1,189m in 2024, a significant 9.5% increase year-over-year, with a net debt to adjusted EBITDA ratio of 2.3x – demonstrating healthy operational performance despite varying property models across their global portfolio

Why Hoteliers Use EBITDAR Over Other Metrics

Reason	Why It Matters for Hotels
Normalizes Rent & Tax Impact	Makes owned vs. leased hotels comparable, especially in multi-property chains.
Focuses on Core Ops	Filters out financial distractions to highlight operational efficiency.
Investor-Friendly	Trusted by hotel investors, brands, and financial analysts.
Global Relevance	Useful across countries with varying lease models and tax laws.

EBITDAR isn’t just a number—it’s a decision-making tool for owners, operators, and investors alike.

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Major hotel groups rely heavily on this metric for strategic planning. For instance, Marriott International uses EBITDAR when evaluating their leverage position, maintaining a net debt to EBITDAR range of 3 to 3.5 times even while executing significant transactions like their recent citizenM acquisition.marriott.gcs-web.com

How to Calculate EBITDAR for Your Hotel

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The formula is:

EBITDAR = Net Profit + Interest + Taxes + Depreciation + Amortization + Rent/Restructuring

Example Calculation:

Item	Amount (INR)
Annual Revenue	₹2,50,00,000
Operating Costs (excluding below)	₹50,00,000
Interest	₹3,00,000
Taxes	₹7,00,000
Depreciation	₹5,00,000
Amortization	₹2,00,000
Rent	₹10,00,000

Step-by-step:

Net Operating Profit = ₹2,00,00,000
Add Interest, Taxes, Depreciation, Amortization, Rent = ₹27,00,000
EBITDAR = ₹2,27,00,000

This figure gives you a standardized benchmark for evaluating performance across all properties.

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How Revenue Management Impacts EBITDAR

EBITDAR measures earnings before rent and non-operational factors, but to maximize it, hotels must improve their top-line revenues and reduce operational inefficiencies.

That’s where Revenue Management Systems (RMS) play a crucial role in strengthening your hotel revenue strategy.

That’s where Revenue Management Systems (RMS) play a crucial role.

Key RMS Contributions:

Increase RevPAR and ADR
Reduce empty inventory
Improve rate parity and OTA strategy
Optimize demand forecasting

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The more revenue your property generates across all sources—rooms, F&B, events—the higher your EBITDAR goes.

Boost EBITDAR with AxisRooms’ Revenue Management System

AxisRooms offers a powerful, AI-backed Revenue Management Service that helps hoteliers like you improve operational profitability across the board.

AxisRooms RMS: Key Features

Feature	How It Helps Your Hotel
Dynamic Pricing Engine	Adjusts room rates based on demand, seasonality, occupancy & competition.
Multi-property Dashboard	Centralized control over pricing and performance for chains and groups.
GDS Connect & Channel Manager	Ensures competitive rates across all OTAs and direct booking platforms.
Performance Reports	Offers real-time insights into RevPAR, ADR, occupancy trends, and forecasts.
Yield Optimization	Balances volume vs. rates to drive better margins from every room night.
OTA Integrations	Supports seamless listing updates, bookings, and rate parity across platforms.

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AxisRooms integrates your revenue management strategy with actionable insights—helping you increase EBITDAR without overspending.

Let’s Understand the Components of EBITDAR in Detail

Component	What It Means for Your Hotel
Interest	Loan servicing costs—commonly seen in renovation, expansion, or pre-opening loans.
Taxes	Regional and national taxes that differ by property location.
Depreciation	Value loss of physical hotel assets like HVAC systems, kitchen gear, or furnishings.
Amortization	Gradual expense on intangible items—software, branding rights, trademarks, etc.
Rent/Restructuring	Lease costs for properties, or rebranding/restructuring investments (e.g., brand conversion).

These costs, while important, vary widely between properties. EBITDAR removes them to reflect true operational performance.

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Read Also - Top Hotel Pricing Tools for 2025 Revenue Goals

EBITDAR vs. EBITDA: What’s the Difference for Hoteliers?

EBITDA excludes interest, taxes, depreciation, and amortization—but includes rent.
EBITDAR takes it further by also excluding rent and restructuring, offering a cleaner comparison across leased and owned hotels.

This makes EBITDAR more suitable for benchmarking hotel chains, brand conversions, or management contract performance.