In many hotel projects, rent is reduced to one figure: euros per room, per month or per year. That figure matters. But on its own, it says too little.
A good lease structure does not only answer how much is paid. It answers how stable that cashflow is under real market conditions.
That is why I prefer to speak about lease architecture rather than rent level.
A hotel lease allocates risks: demand, ramp-up, inflation, payroll, energy, capex, FF&E, maintenance, reporting, indexation and security package. If these elements do not fit together, a strong rent can quickly become a weak contract.
The highest rent is rarely automatically the best rent. Operator processes often produce offers that look strong in the first comparison but raise questions in underwriting. If the rent is not covered by GOP, EBITDAR or realistic revenue assumptions, it will be challenged in financing, due diligence or exit.
Five points matter most to me: rent sustainability, realistic ramp-up logic, measured indexation, security package aligned with the operator profile, and clear capex and FF&E responsibility.
Rent-free periods or step-ups are not automatically a weakness. Used properly, they can make a contract more investable because they reflect operational reality more cleanly.
Hybrid models are particularly sensitive: minimum rent plus turnover rent, variable components or cap/floor structures. These models can make sense. But they must be modelled so that a buyer understands the cashflow.
Conclusion: a good lease structure does not maximise the first number. It maximises the robustness of the cashflow - and therefore the value of the asset.