Hotel EBITDA: how to calculate real profitability

If your hotel is billing more than last year and profit still isn't keeping up, you're not alone. Many properties fall into the trap of watching only revenue and forget to measure whether the operation is actually profitable. That's where EBITDA comes in.

The EBITDA calculation is simple: start with net profit and add back:

• interest
• taxes
• depreciation
• amortization

That gives you the pure operating result, without debt or tax loads. For a hotel, it's the cleanest way to compare properties and see if daily management is working. If EBITDA margin is healthy, the operation is solid.

My take: EBITDA is useful, but it's not everything. If you only watch it, you can forget that room renovations or air conditioning machinery wear out too. Use it as a thermometer for operations, not as the only truth. And next time someone presents a record sales report, ask for the EBITDA. The answer will tell you if it's a real success or just smoke.