Skip this chapter if your professor hasn't enabled financial features. You can check by looking at the navigation: if you see a Financials tab in the top nav, this chapter applies. Otherwise, ignore.
When enabled, financial instruments turn the simulator into a more realistic cash-management game. You're not just running a hotel — you're running a business, with all the cash-flow stress that comes with it.
The instruments
| Instrument | What it is | When to use |
|---|---|---|
| Replacement Reserve | A required savings account that builds toward capital projects — and backstops new amenity investment when your budget falls short | Always — it's automatic |
| Revolving Credit Line (Revolver) | A short-term loan that auto-draws if your cash goes negative | When you're temporarily cash-strapped |
| Capital Injection | A request to your "owner" for more equity money | When you need long-term capital, not a temporary plug |
| Amenity Term Loan | Financing to complete an amenity you can't fully fund — it amortizes over a fixed term | When budget + reserve fall short of an upgrade you want now |
(Your professor enables each of these independently — you may see some, all, or none.)
The Financials page
The Financials page — operating cash, reserve balance, revolver position, debt covenants.
Operating cash vs investment cash vs reserve
Three different "buckets":
| Bucket | What's in it | What it pays for |
|---|---|---|
| Operating cash | Profit accumulated from running the hotel | Day-to-day costs: amenity OpEx, channel commissions, marketing, maintenance, brand fees |
| Investment cash | Capital your professor seeded you with | Amenity CapEx, brand joining fees, large one-time investments |
| Replacement Reserve | A small percentage of revenue, auto-contributed each period | Replacing aging amenities when they need it |
Keep these straight. Mixing them up is the #1 financial mistake students make.
💡 On My Hotel → Info (Chapter 3.1), the "Total Available to Spend" figure is your investable funds: your accumulated weekly budget plus your Replacement Reserve (also called the FF&E reserve), combined into one number. That's your real spending power for amenities and other investments right now — not your day-to-day operating cash, which is a separate bucket that pays running costs.
Replacement Reserve — the automatic one
Every period, a small percentage of your revenue is automatically moved into a Replacement Reserve account. This isn't a choice — it's a covenant.
The reserve sits there earning a small return until you need to use it. You'd use it when an existing amenity reaches the end of its "useful life" and needs to be replaced.
You don't actively manage this. Just know it's there, slowly accumulating, and don't be alarmed when you see it on your P&L as a deduction from operating profit. When you invest in an amenity and your weekly budget alone doesn't cover it, the simulator automatically draws the rest from your reserve (it tells you how much) before ever offering a loan — so the reserve is your first backstop, not a last resort.
Amenity Term Loan — financing an upgrade
If your professor enables this, the Amenities tab shows a "🏦 Finance (loan)" button when your budget + reserve still can't cover an upgrade. The loan funds the shortfall and, unlike permanent debt, it amortizes: you pay interest on a declining balance and the principal is paid off over a fixed term (your professor sets it — e.g. 12 periods). Each period the interest on your P&L shrinks, and the balance on the Debt tab falls toward zero.
If Credit Standards are also on, the loan is underwritten first — your DSCR and LTV must clear the thresholds, or the request is denied (or approved at a higher rate). Weak operating results mean no easy debt, just like real life.
💡 Financing lets you move faster, but interest is a real cost on your P&L. Borrow when the upgrade pays for itself sooner than the interest costs you — not just because you can.
Revolver — the safety net
If your operating cash goes negative at the end of a period, the revolver automatically draws to bring you back to zero (or to your minimum cash floor, if you've set one).
You'll see this on your P&L as:
- Revolver draw: amount drawn
- Revolver interest: cost of the draw next period
Why it's a safety net (not a strategy)
Auto-drawing keeps you operational. But:
- The interest rate on revolver debt is higher than your operating margins
- A growing revolver balance signals to your covenants you're in trouble
- If you stay in revolver debt for many periods, your credit standards may downgrade — making future borrowing harder
💡 The revolver is fine for a one-period cash crunch. It's a red flag if you're still on it three periods later.
Capital Injection — the long-term option
If you need permanent capital — say, to fund a major amenity investment that the revolver can't cover — you can request a Capital Injection from your "owner" (your simulated equity backer).
You'll get a form to fill out:
- How much you want
- What you'll use it for
- Why it's worth the equity dilution
Approvals are not guaranteed. Your professor (acting as the owner) may say no, especially if your operating performance is weak or if you've already injected capital recently.
Credit standards — what they mean
The Financials page also shows your credit standards — DSCR (Debt Service Coverage Ratio) and LTV (Loan-to-Value).
You don't need to memorize these. The page tells you whether you're inside acceptable bands or in danger of a covenant breach. If you're in danger, fix it — by raising operating profit, paying down revolver, or both.
Ambient alerts
If your cash position becomes critical, you'll see:
- A pulse pill on your hotel layout (replaces or augments the normal cash pill)
- A banner at the top of decision pages
These are warnings, not blockers. You can still play normally — but you should treat them as urgent.
The strategic implication
Financial instruments add a layer of consequence to your operational decisions:
- Aggressive marketing spend → operating cash drops → revolver draw → interest expense → less margin
- Over-investing in amenities → investment cash depleted → can't buy the brand upgrade you needed → opportunity cost
- Under-investing → no growth → falling behind → tough cycle to break
The game becomes: make decisions that grow operating profit faster than your obligations grow.
Next
→ Chapter 13: FAQ & Troubleshooting