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Hubbart Formula

The document outlines the Hubbart Formula which provides a method for calculating desired income, pre-tax income, interest expenses, income before taxes and interest, income before fixed charges, operating expenses, required department income, rooms department income, direct expenses in rooms department, room revenue, number of rooms sold, and average daily rate for a hotel based on owner's equity, owner's expectation, income tax rate, total investment, annual interest rate, fixed charges, management fees, administrative/general expenses, marketing expenses, maintenance/energy costs, food and beverage income, cost per room, occupancy percentage, and number of rooms.

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Linette Yang
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199 views1 page

Hubbart Formula

The document outlines the Hubbart Formula which provides a method for calculating desired income, pre-tax income, interest expenses, income before taxes and interest, income before fixed charges, operating expenses, required department income, rooms department income, direct expenses in rooms department, room revenue, number of rooms sold, and average daily rate for a hotel based on owner's equity, owner's expectation, income tax rate, total investment, annual interest rate, fixed charges, management fees, administrative/general expenses, marketing expenses, maintenance/energy costs, food and beverage income, cost per room, occupancy percentage, and number of rooms.

Uploaded by

Linette Yang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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HUBBART FORMULA

Desired Income
= (Owners Equity x Owners Expectation)
Pre-Tax Income
= ( Desired Income/ (1-Income Tax Rate) )
Interest Expenses
= ( Total Investment Owners Equity) x Annual Interest Rate )
Income Before Taxes and Interest
= (Pre-Tax Income + Interest Expenses)
Income Before Fixed Charges
= (Income Before Taxes and Interest + Fixed Charges and
Management Fees)
Operating Expenses
= ( Admin/ General + Marketing + Maintenece/Energy)
Reqd Department Income
= (Operating Expenses + Income before Fixed Charges)
Rooms Department Income
= ( Reqd Department Income + F&B Income)
Direct Expenses in Rooms Department
=(# of rooms x Cost Per Room x Occupancy % x Year 365)
Room Revenue
=( Room Department Income +Direct Expenses in Room Department )
#of Rooms Sold
=( # Of rooms x Occupancy x 365)
ADR= Room Revenue/# Room Sold
RULE OF THUMB ADR
Total Investment / # of Rooms = A
A/1000 =ADR
Divided by $1000 because you charge $1/$1000 to build each room

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