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Growth Calculator Help
Calculate your future earnings in 3 simple steps
Our Growth Calculator is an interactive application that enables you to assess how your investment can work for you in 3 simple steps. It offers absolute transparency and empowers you to make informed decisions by allowing you to configure the parameters to arrive at the total earnings from this investment. In essence, it helps you plan and “visualize” your growth before you make the investment – a truly digital experience!
Step - 1
Enter the amount you wish to invest – called the participation amount (e.g. USD 50,000) and click the search button.
Step - 2
The application lists the properties that match your investment amount. Select a property.
Step - 3
You will now see your total earnings with a chart providing a breakdown of the 4 components of your earnings – protected earnings, asset appreciation earnings, 7 free room nights earnings and hotel performance earnings.
Note: The above earnings are derived based on industry growth assumptions. The calculator allows you to “play” with and vary these parameters with a simple, easy-to-use slider to arrive at the total earnings.
How do you arrive at your total earnings?
There are 4 components that contribute to your total earnings.
1. Protected Earnings:
Protected earnings is a unique offering by GreatX whereby we provide a minimum return of 7% on your participation amount/equity. This amount is independent of all other variable earnings like asset appreciation and hotel performance earnings.
2. Asset Appreciation Earnings:
This is the rate at which the value of the asset (hotel property and so the room you purchased) increases in one year. The asset appreciation rate depends on various factors such as the overall economic environment, local market dynamics like tourism, corporate travel, supply of and demand for hotel rooms, the hospitality industry’s performance, etc.
3. 7 Free Room Night Earnings:
This is another unique offering by GreatX whereby every year we offer our room owners 7 free nights at any hotel in the GreatX collection. You can use these 7 nights personally, choose to sell these room nights through our partner’s platform OR get paid for the revenue these 7 nights produced for the hotel. The revenue is based on yearly ADR (Average Daily Rate).
4. Hotel Performance Earnings:
Each hotel’s financial performance is driven by two key factors: ADR (Average Daily Rate) and Occupancy. These factors can vary based on supply and demand. Your room’s net profit after deducting all operating expenses (including mortgage interest, and tax is the profit of the hotel (and your room) which is passed on to you (the investor).
How earnings calculations are made.
1. Protected Earnings:
GreatX offers its investors a 7% guaranteed return on their participation amount. This amount is independent of asset appreciation and hotel performance. So, for example, if an investor participates with $30,000; his protected earning will be $2,100 per year. Investors will receive these earnings at the end of the year for each year of their investment tenure.
2. Asset Appreciation Rate (AAR):
The AAR is determined by using a combination of external and internal valuation methods. The external valuation method is a 3rd party appraisal/valuation report. The internal valuation method incorporates financial performance, depreciation of the asset, local market conditions, etc. The industry average is 3-5% so we are using 4% as a benchmark. For example, if a hotel is appreciated at a rate of 4% in any given year; the investor’s AAR on a $30,000 participation amount will be $1,200 for that year. Investors will receive these earnings upon sale or other disposition of the asset based on the actual, cumulative appreciation at the time of sale.
3. 7 Free room nights:
Free nights earnings are determined using a simple formula. The number of nights not used (or sold) by the investor is multiplied by the annual average ADR. For example, if an investor(s) did not use any of their 7 free nights and the annual average ADR for that hotel is $100, their free nights earnings will be calculated as 7 x $100 = $700. Investors will receive these earnings at the end of each year.
4. Hotel Performance:
Hotel performance earnings are the net profit the hotel generates after deducting all expenses, taxes, reserves, and interest payments from the total revenue. GreatX passes on 100% of net profit to its investors. If a hotel generates a negative cash flow, the investors are not liable for the loss. Net profits are determined through a certified and audited accounting report. Investors will receive these earnings at the end of the year for each year of their investment tenure.
Glossary:
A. Participation Amount:
The amount of money that you intend to invest in the GreatX tokens and connect to the specific hotels. This is the equity portion of the purchase.
Asset Appreciation:
The rate at which the value of the asset (hotel property and so the room you purchased) increases in one year. The asset appreciation rate depends on various factors such as the overall economic environment, local market dynamics like tourism, corporate travel, supply of and demand for hotel rooms, the hospitality industry’s performance, etc. For the purpose of simulation, you can set the asset appreciation rate at various levels and see its effect on your total earnings.
2. Tenure:
Tenure is the duration OR life of your investment. It could be from one to 10 years at your discretion.
C. Hotel Performance:
The operating profit of the hotel. Hotel Performance is driven by two key factors: ADR and Occupancy (Average Daily Rate and Occupancy). These factors can vary based on supply and demand. For the purpose of simulating the performance in this calculator, a 100-room, the limited-service hotel is used as an example. The hotel’s financial performance results change as you change ADR or/and Occupancy. This is designed to give you control of these levers and see the effect your changes to these parameters make on your performance-based earnings.
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