HBG Business Model

On consolidation, management fees paid by properties cancel against fee revenue received by ManCo. The system validates Fees Paid = Fees Received within tolerance.

Business Models

Three business models are supported, set via businessModel field on each property:

See .agents/skills/research-methodology/SKILL.md §2.2–2.3 for detailed financial profiles.

VRBO/STR Business Model Details

Short-term rental properties operate fundamentally differently from hotels:

Expense Categories Excluded

VRBO/STR properties do NOT have:

• F&B department expenses (no food service)
• Events/meetings department (no event space)
• Spa/wellness department
• Full housekeeping department (per-turnover cleaning instead)
• Concierge/front desk staffing

Platform Fee Structure

Management Fee (All-In)

Unlike hotels with 2–10% base + incentive structure, VRBO/STR uses an all-in management fee:

No separate incentive fee — the all-in fee covers everything.

Depreciation Difference

Revenue Mix Differences

VRBO/STR Expense Structure (% of Revenue)

Lodge Business Model Details

Lodges sit between Hotel and VRBO in operational complexity:

• F&B Revenue: 15–25% of room revenue (breakfast, meals, drinks, picnics) but no full restaurant department
• Events: 0% — no event space staffing
• Management Fee: 15–25% (between Hotel 2–10% and VRBO 20–35%)
• Cleaning: Per-turnover $150–$500 (larger property = higher cost)
• Amenities: Premium (gym, sauna, hot tub, sports courts, media room) but self-service
• Staffing: Minimal on-site (caretaker + cleaning crews)
• Occupancy: 45–70% stabilized (seasonal, group bookings)

Hospitality Revenue Streams

Room Revenue (Primary)

Room Revenue = Room Count x DAYS_PER_MONTH (30.5) x ADR x Occupancy

• ADR grows annually by adrGrowthRate
• Occupancy ramps from startOccupancy to maxOccupancy via step-function
• RevPAR = ADR x Occupancy

Ancillary Revenue (as % of Room Revenue)

Note: VRBO properties typically have 0% F&B and Events revenue shares. Lodges have significant F&B revenue (15–25% of room revenue) from breakfast, meals, drinks, and picnics, but no Events revenue.

USALI Income Waterfall

Total Revenue
  - Departmental Expenses (Rooms, F&B, Events, Other)
  - Undistributed Operating Expenses (Admin, Marketing, Property Ops, Utilities, IT, Other)
  - Insurance
  = GOP (Gross Operating Profit)
  - Management Fees (Base Fee + Incentive Fee)
  = AGOP (Adjusted Gross Operating Profit)
  - Property Taxes
  = NOI (Net Operating Income)     [NOI = AGOP - expenseTaxes]
  - FF&E Reserve
  = ANOI (Adjusted Net Operating Income)
  - Interest Expense
  - Depreciation
  - Income Tax (with NOL carryforward at 80% cap per IRC section 172)
  = Net Income

Engine chain: gop -> agop -> noi -> anoi

Key Metrics

Insurance

• Property insurance: expenseInsurance = (totalPropertyValue / 12) × costRateInsurance × fixedCostFactor (default 1.5%)
• Included in totalOperatingExpenses (before GOP), NOT in fixed charges
• Company insurance = DEFAULT_BUSINESS_INSURANCE_START / 12 = $1,000/mo (businessInsuranceStart field)
• Key fields: costRateInsurance (input), expenseInsurance (output), businessInsuranceStart (company)

Expense Categories (USALI-Aligned)

Management Fee Model

• Base Fee: 8.5% of Total Revenue (or granular Service Fee Categories summing to 8.5%)
• Incentive Fee: 12% of GOP. max(0, GOP x incentiveFeeRate)

Service Fee Categories

Management Company Overhead

Fixed Costs (escalated by inflation)

Variable Costs

Staffing Tiers

SAFE Funding Vehicle

• Two tranches with configurable dates, amounts, valuation cap, discount rate
• Default tranche amount: $800,000 each
• Operational gate: No ManCo revenue or expenses until BOTH companyOpsStartDate AND safeTranche1Date are reached

Property Lifecycle

Acquisition -> Pre-Opening -> Operations -> Hold Period -> Refinance (optional) -> Exit

Key Dates

• acquisitionDate: Debt and depreciation begin. Defaults to operationsStartDate if omitted.
• operationsStartDate: Revenue and variable expenses start. May be later than acquisition.

Hospitality Vocabulary

Key Files