FF&E Reserve Calculator
Reserve = total revenue × reserve rate
Enter your numbers for the yearly reserve and the total over your hold.
TL;DR FF&E reserve = total revenue × the reserve rate, typically 4% for branded hotels. On $6,000,000 of revenue that is $240,000 per year, and about $1.27M over a 5-year hold with 3% revenue growth.
Year-1 reserve
$240,000
Cumulative reserve
$1,274,193
The formula
Reserve (year n) = revenue × (1 + growth)n−1 × rate · Cumulative = sum over the hold
Worked example
A branded select-service hotel does $6,000,000 of total revenue in year 1 with a 4% reserve requirement. Year 1 reserve = $6,000,000 × 4% = $240,000. With revenue growing 3% per year, the reserve grows too: $247,200 in year 2, up to about $270,122 in year 5, for a cumulative $1,274,193 over a 5-year hold.
Typical brand reserve requirements (indicative, as of Q3 2026)
| Situation | Typical reserve rate |
|---|---|
| New build, years 1–2 (ramp) | 1% – 2% |
| Stabilized branded select-service | 4% |
| Full-service / resort | 4% – 5% |
| Lender underwriting floor | 4% |
Rates are indicative and vary by brand, franchise agreement, and asset condition. For preliminary planning only; not an offer of credit.
Frequently asked questions
What is an FF&E reserve?
An FF&E reserve is money set aside each year, usually a percentage of total revenue, to replace furniture, fixtures, and equipment as they wear out: guest room furnishings, carpet, mattresses, kitchen equipment, and similar items. Brands and lenders both require it so the hotel stays competitive.
What FF&E reserve rate do hotel brands require?
Most major brands require 4% of total revenue for a stabilized hotel as of Q3 2026. New builds often ramp up, around 1% to 2% in the first two years, then step to the full rate. Full-service and resort properties can run 4% to 5% given heavier public-space wear.
Is the FF&E reserve the same as a PIP budget?
No. The reserve covers routine replacement over time. A property improvement plan (PIP) is a brand-mandated renovation, often triggered by a sale or license renewal, and its cost frequently exceeds what the reserve has accumulated. That funding shortfall is exactly why PIP financing exists.
How do lenders treat the FF&E reserve in underwriting?
In hotel underwriting the reserve is deducted before NOI when sizing debt. Most lenders apply a floor of 4% of total revenue regardless of what the owner actually spends, so a lower brand requirement does not increase the NOI a lender will lend against.