Why Hotel Capital Plans Must Shift to Net RevPAR
Rising construction costs and declining revenue capture rates mean hotel owners must underwrite renovations using Net RevPAR rather than gross RevPAR. Factoring guest acquisition costs into project pro formas prevents post-renovation margin erosion and protects asset values.
Key Takeaways
- 1Construction costs have surged 34% since 2019 while median development costs reached $219,000 per room.
- 2U.S. hotel revenue capture dropped to 79.22% in 2025, wiping out an estimated $29.2 billion in asset value.
- 3Underwriting with Net RevPAR accounts for high channel acquisition costs that dilute renovation returns.
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