EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent)

EBITDAR is a profitability metric used in hotel valuation and financial analysis. It represents operating earnings before deducting interest costs, income taxes, depreciation on assets, amortization of intangibles, and — crucially for hotels — rent or lease payments. Because hotel properties are often owned separately from hotel operations (via sale-leaseback structures or management contracts), stripping out rent allows investors and analysts to compare the operating performance of hotel businesses regardless of whether they own or lease their real estate.

Formula

EBITDAR = Revenue − Cost of Goods Sold − Operating Expenses (excl. Interest, Tax, D&A, Rent)

Or equivalently:

EBITDAR = EBITDA + Rent / Lease Expense

Example

A 200-room hotel generates €8 million in total revenue. After operating expenses (excluding depreciation, amortization, rent, and financing costs), it reports EBITDA of €2.4 million. Its annual rent obligation is €600,000, making EBITDAR = €3.0 million — a 37.5% EBITDAR margin.

Why it matters

Hotel transactions and franchise valuations frequently use EBITDAR multiples (e.g. "sold at 12× EBITDAR") because they enable apples-to-apples comparisons across hotels with different ownership structures. OTA platforms, private equity investors, and hotel chains all reference EBITDAR when assessing asset-light versus asset-heavy operators. It also features prominently in lender covenant tests and hotel management agreement (HMA) performance benchmarks.

Related

See also GOPPAR, which captures gross operating profit per available room on a per-night basis, and TRevPAR, which focuses on top-line revenue intensity rather than operating profit. For distribution-cost analysis, pairing EBITDAR with NRevPAR gives a cleaner picture of how OTA commissions affect hotel-level profitability.