FF&E reserve
Furniture, fixtures and equipment, set aside before NOI.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: ff&e reserve.Updated 22 October 2026
Part of real estate models, with the models, labs and guides around it.
What it does
The money a hotel sets aside to replace what guests wear out. A share of total revenue, low in the years after a renovation and about 4% once the rooms age, is reserved each year; lenders, brands and buyers deduct it before NOI, because a hotel that stops spending it loses rate. It sits beside the property improvement plan (PIP), the one-off renovation a brand requires, which is funded as a use at closing.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, row 54: FF&E reserve, % of total revenue
- Operating Statement, rows 50–53: FF&E reserve, % of total revenue, FF&E reserve, FF&E reserve per key, FF&E reserve, cumulative
What a reviewer looks for
- NOI struck before the reserve, which overstates value and loan size.
- A reserve on rooms revenue only.
- A PIP treated as a recurring reserve, or the reserve treated as optional.
Learn it, then build it
Vocabulary: Furniture, Fixtures and Equipment Reserve, Property Improvement Plan (PIP).