What is the meaning / definition of EBITDA in the hospitality industry?
EBITDA stands for: Earnings Before Interest, Taxes, Depreciation and Amortization.
This KPI is used to determine how profitable a company or business is with regard to its operations (the profit on the products it produces and sells).
EBITDA is calculated by taking the company’s earnings before interest, tax, amortization and depreciation and subtracting them from the company’s total amount of revenue.
Is an indicator of a company’s financial performance and can be used to analyze and compare profitability between hotels / companies / industries because it eliminates the effects of financing and accounting decisions.
How do you calculate EBITDA?
- EBITDA Formula: Revenue – Expenses*
* Expenses in this case are excluding interest, taxes, depreciation and amortization.