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# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

1031 Exchange

Under Section 1031 of the United States Internal Revenue Code, this allows an individual to postpone paying tax on any capital gains as long as proceeds from those gains are invested in property that qualifies as a like-kind exchange. Both properties must be used in a trade, business, or investment. To avoid a taxable event upon disposition, the owner(s) must identify and acquire similar properties within a specific time period.

Accredited Investor

A person who has annual income of $200,000 or more individually (or $300,000 or more combined with a spouse) in each of the prior two years and reasonably expects the same for the current year. Another way to qualify as an accredited investor is to have a net worth equal to or greater than $1,000,000 USD, either alone or together with a spouse (excluding the equity of your primary residence).

Acquisition

The process of purchasing an asset such as land or a existing hotel.

ADR

Average Daily Rate is a metric used to gauge the average rental income per room. You get this number by: total room revenue ÷ # of total rooms = ADR. Sometimes rooms are rented at different rates so ADR is a helpful tool to look at the average strength of room rate.

Alternative Lodging

Alternative lodging refers to lodging products outside of conventional hotels and motels, including private accomodations through HomeAway and Airbnb.

AOP

An Area of Protection (AOP) is a predetermined geographic area of exclusivity during a defined period of time, in which a franchisor promises to a new franchisee to protect and prevent future competition or market dilution by similar flags within the same brand family.

Brand

Describes a hotel company that has created a specific style or certain standards and protocols for affiliated lodging facilities. Many hotel brands franchise their hotel product to investors, developers, and owners. Many brands feature a robust lineup of sub-brands or different hotel flags that cater to a specific niche clientele or market segment.

Capital Raise

This is the technology and legal process of raising money.

Capital Stack

A capital stack refers to the combination of equity and debt financing sources that entirely fund either a purchase or development of a hotel project. The two major ingredients in a capital stack are equity and debt.

Cashflow

The total amount of liquid money being derived from a business.

CBD

Central Business Districts are the commercial and business centers of cities, villages, or municipalities.

CBRE

The Coldwell Banker Richard Ellis Group (CBRE) provides real estate services, mainly brokerage of commercial property, valuation services, and real-estate management services.

Central Reservation System

A centralized system, typically a 800 number and/or a website designed by each brand in the hospitality industry to help customers book reservations at branded, franchised, or affiliated hotels in each respective Brand family. Hilton has it's own central reservation system that can help travelers find lodging accomodations at any one of its fourteen flags. Central reservation systems are very helpful to travelers that identify with a specific brand loyalty or are interested in earning loyalty points by staying at brand affiliated properties.

Chain Scale

Different classes of flags within a brand, based on quality, amenities, and average room rates. These can range from Luxury Chains such as the Ritz-Carlton to limited-service chains such as Fairfield Inn. Luxury properties tend to be at the top of the chain scale, while economy flags tend to be at the bottom of a chain scale.

Class A Site

The highest ranked category for prestigious office buildings and/or other commercial assets like hotels. The ranking category often takes building quality and location into consideration. Assets located on Class-A sites tend to earn above average rents for the area. Buildings have high quality standard finishes, state of the art technology, exceptional accessibility and a strong market presence.

CMBS Loan

A Commercial Mortgage Backed Security (CMBS) is a type of loan or debt instrument specifically for commercial real estate and typically offers non-recourse protection to the borrower. Pre-existing stabilized hotels are the ideal candidates for CMBS lenders.

Collateral

Property that a lender can seize or liquidate should a borrower fail to repay a loan as per the loan agreement terms. Collateral property is used to help secure a loan.

Competitive Set

Also known as a comp-set, is a group of similar hotels and competitors for a hotel. Defining a comp-set helps hotel companies focus their marketing strategy and influences what products they develop.

Crowdfunding

This is a form of capital fundraising for a project by means of online capital formation, or people investing online. Crowdfunding is the concept of using newer technology and newer legislation to raise capital. EquityRoots uses crowdfunding technology as a finance mechanism to help investors gain access to institutional grade hotel investments that would otherwise be out of reach for typical investors. Crowdfunding is democratizing the investment marketplace, providing high quality investment opportunities to the masses. Additionally, crowdfunding becomes a very efficient investment model especially when the crowdfunding platform doesn't pay brokers, dealers, or other middlemen to source investors.

Debt

In hotel development terms, debt is a legal instrument, either secured or unsecured to real property, and a way for developers and owners to borrow money to be repaid with interest under specific terms to a lender. Developers and owners can increase their return on investment (ROI) by leveraging debt in their capital stack. Debt financing is commonly used to acquire existing assets and to help finance ground up new development.

Deferred Maintenance

The practice of postponing repairs or improvements on a hotel property to save costs.

Demand Drivers

These are the primary influencers for hotel demand. Tourist destination, business facilities, office space, convention centers, shopping malls, assisted living centers, residential population, and expressway infrastructure are all examples of demand drivers for hotels. A hotel desires to be within close proximity to demand drivers. The more demand drivers that are present in a market, there is a reasonable expectation of more lodging demand, or higher occupancy levels.

Depreciation

Reductions in the value of an asset, reflected on a tax return to offset taxable gains. In particular, a reduction in the value a hotel has as it ages over time.

Developer

The person or group responsible for constructing or renovating a new hotel. A developer organizes the transaction all the way from site control, negotiating with hotel brands, negotiating with government, negotiating with lenders, and hires a general contractor to finish construction. A developer often invests their own capital but also takes on investors to help fund their projects.

Disposition

The act of selling an asset or security through direct sale or some other conveyance.

Dual Brand Hotels

A single structure or connecting structures that house two or more hotel brands or different flags that share common public space. For example, a single tower which offers a Hilton Garden Inn and a Home2Suites, which are both Hilton products. It's not unusual to see mixing and matching of flags within the same and among the "big 3" different brand families. Dual-branded hotels offer significant advantages from a development and operating cost perspective to the ownership.

EB5 - Immigrant Investor Program

An immigrant investor program created by Congress in 1990 that allows non-U.S. Citizens to gain lawful permanent residence for themselves and their immediate unmarried family members under the age of 21. Under this program, immigrant investors can gain a EB-5 Visa as long as they make a capital investment of $500,000 in a Targeted Employment Area or an investment of $1,000,000 in a new commercial enterprise in the U.S. The enterprise must also create or preserve 10 full-time jobs for qualifying U.S. work within two years. New construction hotels are an ideal candidate for EB-5 investments because they typically meet all of the qualifying criteria for job creation.

Economic Development

This is a phrase to describe the addition of jobs, investment, and tax revenue to a particular area. Many local governments have a special department for economic development that utilizes a number of economic development tools to assist developers to help create jobs and tax revenues within their city, village, or municipality.

Equity

In hotel development terms, equity is a legal instrument that represents ownership. Equity is commonly fractionalized into shares, units, or membership. Equity typically serves as the down payment towards a loan. Equity paired with debt creates a full capital stack. Or in other words, equity paired with debt should equal total purchase price or total development cost.

Equity Interest

This is a form of ownership. Some examples of it are stock in a corporation and/or membership interest in a company. The amount of ownership a person owns in a hotel investment is by measuring some form of the investors' equity interest.

Equity Multiples

A sum of all equity and appreciation repaid to the investor at time of an asset's disposition plus all profits distributed during the hold period, divided by the total equity invested. Equity Multiple = (Equity Repaid at Disposition + Total Profits During Operating Years) / Total Equity Invested.

Extended Stay

Extended Stay hotels are typically designed for "all-suite" longer term guest. Sometimes corporate training seminars and conferences can last for more than 7 days so hotel guest that want to feel more at home with larger rooms or separate bedrooms, kitchenettes, and lounge areas may prefer an "all suite" extended stay property. Some examples of extended stay brands are Residence Inn by Marriott, Home2 by Hilton, Staybridge, Hyatt House.

Exterior Elevations

Exterior elevations are drawings that portray what each side of a developed asset looks like from the outside, and includes key information that the architect and builders use during construction, including masonry specifications and building height and dimensions for windows, doors, and balconies. These drawings may include decoration and color schemes, but most basic exterior elevations include general structural information about the building.

F&B

The food and beverage (F&B) department of a hotel that oversees catering, restaurant, lobby bar, and room service in a full service hotel. Many select-service hotels also have a F&B component to their business.

Feasibility Study/Market Study

Many firms use their industry knowledge and other reports to form a basic outlook on the current and future health of a market. They often use this data to make an educated guess on the feasibility of a proposed development.

Fee Simple

This is a legal interest in real property. It is typically associated with the strongest form of ownership, because title is not restricted or encumbered, and the owner may freely mortgage or convey a security interest in their property to another party.

FF&E

Furniture, fixtures and equipment. FF&E is an acronym that simply refers to property without a permanent connection to the real estate component of the hotel. Hotel owners and Brands typically replace FF&E every 7-10 years to keep the hotel in fresh condition. Although the value of these items typically depreciate quickly over time, they are also important costs to keep in mind as hoteliers think about either valuing a hotel or operating one.

Fix-and-Flip

Fix and Flip describes a specific investment strategy in which investors purchase real property. They typically remodel, renovate, or make improvements to the property, and later resell the property to earn a profit. With minimal barriers to entry, almost anybody can attempt to fix-and-flip a home in the residential space.

Flag

A specific hotel product that operates under and is affiliated with a larger hotel brand network. For example, IHG is a brand, whereas Holiday Inn and Holiday Inn Express are flags under IHG. Parent hotel brand companies create several flags to satisfy a wide variety of specific consumer niche markets.

Floor Plans

Floor plans are marked up layouts of a development that architects, developers, and general contractors utilize to help plan before and during construction of a new development. These floor plans often include dimensions, entryways, and easements that are to be created on the property.

Foreign Investor

This is an investor domiciled outside of the United States. These investors are often looking for commercial real-estate investments within the United States. Federal legislation such as the Immigrant investor Program, or the EB-5 program allows the investor to obtain permanent residency within the United States if their investment qualifies and completes the procedural process. For more information, please see our Foreign Investor page.

Franchise Approval Letter

A developer must submit an application along with their resume and a proposed location of which they have site control over in order to receive a franchise approval letter.

Franchisee

A person or group that is given a license for a specified term to do business under a company franchisor's trademark and name. For example, individual hotel properties can pay Marriott a franchise fee in order to use Marriott's name and central reservation system to drive increased demand to their hotel property. As part of the license agreement, franchisees must adhere to operating benchmarks and specifications according to the franchisor, such as interior design, FFE, and food and beverage standards.

Franchisor

The franchisor is the brand company that grants licensing rights to individuals or groups to use their business model and products. For example, the Hilton company franchises different brands to franchisees, including Home2 Suites by Hilton, and the Hilton Garden Inn.

Full Service

Full Service luxury hotels are large boxes that often have multiple conference rooms, restaurants, and sometimes convention space. Examples of full service luxury hotels are Ritz Carlton, Renaissance, Westin, Intercontinental.

Hold Period

The period of time that an investor has possession of ownership or an investment (such as a hotel). A hotel developer and deal sponsor can stipulate the minimum holding period for an investment and install restrictions on the transferability or ability for investors to resell their investment.

House Bill 3429

An Illinois House Bill that allows non-accredited investors that live, reside, or domiciled in Illinois to invest in a hotel investment opportunity by means of general solicitation, as long as that project or real estate is also located in Illinois.

HVS

HVS Global Hospitality Services offers valuation, consulting and market research specifically for the worldwide hotel industry.

Independent Hotels

A hotel, motel, or lodging facility that is independent of brand requirements. Independent properties do not have any affiliation with branded hotel chains. Independent hotels do not have to pay royalty fees to a franchisor, but they also miss out on central reservation systems, and brand loyalty programs.

Industry Money

This is the investor segment that often leads the way. Equityroots.com has the largest membership of active developers, operators, general managers, director of sales, and owners. These investors are very familiar with hotel investing because they currently are, or previously have been in the hotel industry. Many of them have built tremendous portfolios of their own, and are now just looking to diversify their positions. Veteran hotel owners have used equityroots.com to diversify their portfolio by brand, region, and type.

Intrastate Crowdfunding

The process of investing in a project with multiple investors who all reside within the same state. Many States got tired of waiting for federal legislation which would allow unaccredited investor participation, hence enacting their own State legislation which would allow unaccredited investors to participate when the asset and investors are both domiciled in the same State. Not all States enacted intrastate crowdfunding laws, but many States such as Illinois, Texas, Georgia, Florida, and Alabama have enacted some form of intrastate participation.

Investor

This is a person or entity trying to invest money into a hotel deal. These people come from all walks of life and want a real-estate backed investment. Their intent is to exchange money for a debt or equity position in one or many of our hotel offerings. Securities laws often dictate who can participate. Please see our FAQ section to determine investor eligibility.

Issuer

This is the person or entity trying to raise capital.

JOBS Act 2012 (Jumpstart Our Business Startups)

The Jumpstart our Business Startup Act was voted in on April 5th, 2012 under President Obama and Congress. This new piece of legislation amended the original 1933 Securities Act to help startup companies promote, solicit, and subscribe investors from the general public. The JOBS Act is prescribed to be updated and amended every five years. Equityroots.com uses the JOBS Act to allow real estate developers to present their projects as investment opportunities to the general public. Depending on the offering type, investor participation may be limited to accredited investors only.

Keys

Key is another word for hotel room. Hotel properties are commonly sized by number of keys.

Leverage

Leverage is a measure of how much debt is utilized in the capital stack. For example, if a project costs $12 million and the developer borrows $9 million to finish it, one can say the project is 75% leveraged. Higher leverage often increased yield on equity investments, but introduces more risk to the investment.

Limited Service

Limited service hotels are properties that do not offer restaurant, conference, or banquet facilities. They are designed to be simple and efficient. Limited service hotels typically offer free continental breakfast. As a result of its simplicity and efficiency, these properties are typically the cheapest to develop and maintain. Examples of limited service brands are, Fairfield by Marriott, Holiday Inn Express, Hampton Inn.

Loyalty Program

Reward programs offered by Hotel Brands which allow members/guest to earn points for spending money at a hotel. The more money a guest spends, the more points he or she earns. Larger corporations have company approved budgets for employee travel and expense. While the employers cover the cost, it's actually the traveling employee that earns the reward/loyalty points. Many corporate travelers take the points that they earn through company travel to book leisure trips with their family during vacation time.

LTV

Loan-to-value ratio is a financial term that summarizes what percentage of a purchased asset's value a loan covers, or likewise, what percentage of the total development cost a loan covers. For example, a borrower that takes a $750,000 loan to purchase a hotel valued at $1,000,000 would have an LTV ratio of 75%.

Mezzanine Debt

Mezzanine debt or mezz debt for short is a separate class of debt apart from the primary debt already used to finance a hotel acquisition or new development project. Mezzanine debt is typically used in a temporary position and allows an equity investor to put in less of his or her actual money towards a hotel project. This type of debt typically comes with a significantly higher rate of interest, but can allow investors to earn a higher return on his or her equity.

Multi-family Properties

A single structure or connecting structures that house two or more residential units. 3-flats, 4-flats, and apartment buildings are all considered to be multi-family assets.

Municipality Petition to Develop

Depending on the location of a planned development, hotel developers may need to file a formal petition with the local jurisdiction to seek zoning approval and conduct improvements on a plot of land, including new construction hotels or significant additions to a pre-existing property. These petitions generally include layouts of what the intended development will look like, along with general timelines for construction and intended completion dates. The petition along with a site plan is used for zoning approval.

New Construction Asset

A hotel asset that is newly constructed from the ground up. In the hotel industry, a newly constructed hotel is considered a new construction asset, as opposed to one that is acquired from a previous owner. There are several advantages and disadvantages between new construction assets and pre-existing hotel assets. See our blog for further discussion on this subject.

NOI

Net operating income includes all of the revenue from a hotel minus all variable and fixed operating expenses including staff salaries and utility costs. The balance left over is known as net operating income. Note that you still need to make debt service payments from this balance, any remaining balance can then be distributed to investors and owners.

Non-Accredited Investor

As per SEC, FINRA, and IRS, this is a entity or individual investor that has income of less than $200,000 USD in the last two fiscal years and does not have a personal net worth or assets worth more than $1,000,000 USD (excluding his/her primary residence).

Non-Recourse

Nonrecourse debt prevents the creditor from pursuing borrowers' assets in the event of a default or deficit foreclosure. If a hotel owner uses nonrecourse debt to finance a hotel transaction, but fails to repay the note under the specified terms, the creditor can liquidate the hotel asset, but the creditor has limited recourse in pursuing the borrowers for any deficit or loss. An example of non-recourse notes are Commercial Mortgage Backed Securities (CMBS) loans.

Occupancy

This is a percentage number reflecting how many rooms out of any hotel total rooms are rented.

Operating Agreement

A legal document that defines how a limited liability company is operated and carried through it's business plan. This document explains how critical business decisions are made, and the process to follow while making them. This documents sets expectations for hotel investors on how their business entity is run.

Operator

An individual, firm, or chain which manages and operates the day to day activities of the business.

Opportunistic Turn Around

In real estate, an opportunistic turn around is when a investor identifies a property that is struggling or performing below its comp-set. The investor will often purchase the asset for a favorable price and perform improvements on physical condition of the building, retrain or replace management staff, improve customer service, replace old FF&E, and sometime rebrand the asset as a means to improve business and guest satisfaction.

OTA's

Online Travel Agents allow consumers to book travel services online. Some of the most common OTA's include Expedia and Priceline.

PIP

Property Improvement Plans (PIP) are implemented by the Brand franchisor to keep all franchisee properties in compliance with new and ongoing brand standards. A PIP is often implemented at time of ownership change or when a property is rebranded.

Plat of Survey

Property Improvement Plans (PIP) are implemented by the Brand franchisor to keep all franchisee properties in compliance with new and ongoing brand standards. A PIP is often implemented at time of ownership change or when a property is rebranded.

Portfolio

A group of financial assets which can include but not limited to stocks, bonds, mutual funds, notes, real estate, and hotel investments.

PPM

A private placement memorandum (PPM) describes a crowdfunding investment opportunity to passive investors. It's a legal instrument that describes the different classes, total number of units, and the offering type being utilized. PPM's should also have adequate and transparent risk disclosures regarding the investment. A PPM is typically followed by a subscription agreement, operating agreement, joinder, and other exhibits such as audited financials depending on the offering type being utilized.

Pre-Existing Asset

An existing hotel asset is a property that is already open and operating. Pre-existing hotel assets have previously been owned and operated by another hotelier. In the hotel industry, a pre-existing hotel that is acquired by a new owner is an existing asset, as opposed to a newly constructed hotel. There are several advantages and disadvantages between new construction and pre-existing hotel assets.

Primary Markets

Areas, regions, destinations, and major downtown city-centers that have a variety of large scale major demand drivers, amenities, and/or trip generators related to travel, commerce, and leisure. For example, downtown Chicago is a primary market due to its tourism sites and industry hub centers, and highrise Class-A office buildings. Some suburbs also serve as primary markets when it has a large enough population size and enough target destinations for business and tourism. Generally, hotel real estate and land is more expensive in primary markets. Generally, hotels in primary markets tend to earn a higher rate and occupancy compared to similar hotels in secondary or tertiary markets.

Proforma

A financial document, often in Microsoft Excel format prepared by a developer or CPA that draws income and expense projections. This document is similar to a profit and loss statement which provides the basic foundation to calculate net operating income. Some proforma's go the extra step in having additional tabs for debt service assumptions and a breakdown of total development cost. Most lenders will require this document in order to underwrite and approve a loan for new hotel developments. Professional developers often use dynamic versions of their proforma. A dynamic proforma allows the reader to adjust input data causing other data to automatically adjust. For example, if you change the occupancy level on a dynamic proforma, the cost data for payroll, housekeeping, and breakfast costs will automatically adjust to the readers' new assumptions.

Purchasing Power

The number of goods or services you can buy with a set amount of currency. Hotel developers, hotel owners, hotel builders, and hotel management companies often leverage their purchasing power over multiple hotels to get better prices from their vendors.

Real Estate Investment Trusts (REITs)

The number of goods or services you can buy with a set amount of currency. Hotel developers, hotel owners, hotel builders, and hotel management companies often leverage their purchasing power over multiple hotels to get better prices from their vendors.

Rebranding

Rebranding is the process by which a hotel changes brands or flags, including logos, marketing material, central reservation system, and FFE. This cosmetic change typically is coupled with a change in market strategy in an attempt to recapture market share. This can include new policies and a focus on a new customer base.

Regulation A+

Rebranding is the process by which a hotel changes brands or flags, including logos, marketing material, central reservation system, and FFE. This cosmetic change typically is coupled with a change in market strategy in an attempt to recapture market share. This can include new policies and a focus on a new customer base.

Regulation D

The Securities Act of 1933 requires any offer-to-sell-securities to be registered with the SEC or meet an exception. Regulation D provides a few exceptions to this rule, allowing some companies to offer and sell their securities without having to register the securities with the SEC.

Regulation D 506(b)

Under Rule 506(b), companies are allowed to seek investors from an unlimited number of accredited investors and up to 35 unaccredited investors, provided that general solicitation is not used to attract or secure investors.

Regulation D 506(c)

Under Rule 506(c), companies are allowed to broadly solicit and generally advertise security offerings , but can still claim those offerings as private so long as all the investors in the offering are all accredited investors, and the company has taken steps to verify that its investors are accredited investors. This may include reviewing tax returns or requesting a professional opinion letter from the investors' attorney/accountant.

Retail Money

This is the investor segment that represents the masses. These are America's hardest working nurses, engineers, doctors, lawyers, and other professionals looking to grow their wealth through real-estate investments. Most retail investors are too busy in their professional lives to allocate significant time behind their real estate investment, instead they prefer to park their money with industry leaders and seasoned veterans that have long standing and proven track records of building, buying, and selling hotels.

Retiree Money

Retired people often invest on equityroots. They want to put their hard earned money to work, using dividends to cover lifestyle expenses and passing on their principal as wealth through estate planning. The internal Revenue Code and Congress have made special provisions and tax benefits for retirees. One of the preferences afforded to retirement investing is the ability to defer taxable gains as you would find in many individual retirement accounts (IRA). Today's self-directed ira accounts allow investors to invest into commercial real-estate like hotels and recognize all the benefits of a traditional IRA account.

RevPAR

Revenue per available room is a metric that is arrived to by ADR * Occupancy rate. RevPAR is helpful when looking at the big picture.

ROI (Return on Investment)

Return on investment (ROI) is expressed as a percentage and is typically used for business investment decisions. ROI is calculated by taking net profit, dividing by principal investment, and then multiplying by 100 to reach a percentage. To look at ROI over time, investors often find it more helpful to look at a metric called equity multiples.

Secondary Markets

Smaller version of a Primary Market, typically within close proximity of a Primary Market that has its own unique set of demand drivers.

Securities and Exchange Commission (SEC)

An agency of the United States Government that regulates and enforces laws regarding investments, exchanges, and securities.

Select Service

Select Service hotels are a hybrid between full service and limited service properties. Select service hotels typically have some conference space, a bistro style food and beverage option, a bar, and many amenities that follow in the footsteps of their full service luxury counterparts, however the overall size of the hotel is scaled down to a more efficient box with less overhead. Courtyard Marriott, Hilton Garden Inn, Holiday Inn, Hyatt Place.

Self Directed IRA

A specific type of individual retirement account (IRA) that allows investors to invest into alternative investments other than traditional stocks, bonds, and mutual funds. Self-directed accounts require some form of direction or control by the investor which is what makes this type of retirement account so appealing. Many roth ira's and traditional ira's can be converted into a self-directed ira account with the help of a qualified custodian.

Site Control

Site control is an expression of having a certain legal interest in a subject property that allows the developer to represent or control the site in a certain manner to their benefit. A developer may have site control over a property that they do not yet own. There are temporary and permanent forms of having site control. The most popular form of site control is by entering into a purchase and sale agreement that defines a specified time for due-diligence. A developer often gains site control during the due-diligence period of a pending sale.

Soft Branding

Soft branding refers to a hotel that relies primarily on its own independent identity for its brand, but is also affiliated with a larger hotel group for marketing and membership benefits.

Sponsor

This is the person backing and leading the deal. Many times, the issuer and sponsor are the same person or entity. All sponsors on equityroots.com are expected to have at least twenty years experience in building, buying, operating, and selling hotel assets without any prior record of default or bankruptcy. The sponsor behind the deal is just as important as the deal itself in the eyes of online investors.

Stabilization Period

The period of time that it takes for a new hotel to achieve a stabilized average daily rate and occupancy levels after first opening in the market. Hotels generally have lower rates and vacancy when they first open, before gradually achieving stabilization. A typical stabilization period for new construction hotels is 18 months. Typical stabilization period for conversion and repositioning deals is 12 months.

STR Report

Smith Travel Research creates a custom or market report widely used by the hotel industry to help make informed decisions about marketing, sales, and management strategies. These reports measure the occupancy and average daily rate of a hotel or a group of hotels, as well changes in supply and demand in the overall market. Developers often order a STR report on the surrounding compset in order to guage the comparative performance of an existing asset or the viability of a ground up new development hotel.

Targeted Employment Area

A region in the U.S. that is selected and identified due to their need for increased employment opportunities. Investors seeking eligibility for the EB-5 Visa only have to invest $500,000 in Targeted Employment Areas (as opposed to the mandatory $1,000,000 minimum investment).

Tax Deferral

To protect an investment or account from being taxed until a later date. This tool is often used to allow full investments to increase in value over time while remaining tax free until withdrawal at a later date. Common methods of tax deferral are the use of 1031-exhange upon disposition, or individual retirement accounts (IRA's).

Technology Fee

This is a fee associated with the cost of raising capital on equityroots.com. Technology cost often cover digital marketing cost that comes with crowdfunding.

Tertiary Markets

Tertiary markets typically border Secondary Markets and even farther away from Primary Markets. They have less demand drivers and amenities compared to Primary and Secondary markets. Additionally, tertiary markets can be defined as rural highway locations where you've probably seen a cluster of economy hotels/motels.

The Big 3

The Big 3 refers to the three biggest and most successful hotel chains. Marriott, IHG, Hilton.

Title Commitment

A document that contains all details about title or deed to property. It includes relevant information about terms, conditions, encumbrances, restrictions, and exclusions from the title policy which is basically a insurance policy provided by a title company to insure the title after closing. (not to be confused with landowners general liability insurance policy). The title company is merely insuring the title as it is described in the title commitment and will defend the owner from any and all claims contrary to the title commitment document.

Transient Traveler

Transient Travelers are people who are predominantly on-the-move and seek short (and often urgent) hotel-stays.

Underwriting

The process used to determine how much risk a equity participant or lender is willing to accept for a given real estate transaction or hotel project.

Value-Add

Describes the enhancement or improvements that a company makes to its products, services, or property as part of a new affiliation. In rare cases, value-add can sometimes be attained by affiliation alone.

Waterfall

This is the order and preference in which a fund or investment distributes returns to partners, investors, and shareholders. For example, seed investors usually receive their initial investment and a pre-designated return before other partners can begin to receive their shares of the return.

 

 

 

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