Earnings Before Interest, Taxes, Depreciation, and Amortization: The profit from all revenues and expenses; in addition to including departmental expenses and undistributed operating expenses, also includes non-operating expenses that are mostly outside of the management team’s control. These items include insurance, property tax, lease expense, ownership expense, etc. EBITDA is used to evaluate the overall health of an asset. It is worth noting that EBITDA differs from NOI in that it includes restricted cash (as opposed to unrestricted cash which NOI shows). EBITA can be calculated in different ways, but the most common method for hotels is Net Income + Taxes + Interest Expense + Depreciation & Amortization Other Options to calculate EBITA include: Operating Income + Depreciation & Amortization (where Operating Income is profit after subtracting operating expenses) Gross Operating Profit – Management Fees – Fixed Expenses/Income (Insurance, Property Tax, Ownership Expenses, Lease Expenses/Income, Other Expenses/Income, etc…)
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