The Circular Houses financial report uses hospitality, accounting, and real estate investment vocabulary. If you do not come from a financial background, there is no reason you would already know these words. Here is each one explained in everyday language, with an example that makes it clear and a link in case you want to go deeper on any of them.

All figures in the examples are illustrative and rounded so the math is easy to follow. They do not correspond to any real period or result of the project — for that, see the report for the period you are interested in.

Operating metrics

ADR — Average Daily Rate
What it is: the average price charged per night, counting only the nights actually sold. It is the average selling price; it says nothing about how full the asset was.
Example: if 40 nights were sold in a month and USD 4,000 came in, ADR is 4,000 ÷ 40 = USD 100. Empty nights are not part of the calculation.
Read the full explanation →

Occupancy (OCC)
What it is: the percentage of available nights that were actually sold. It measures how full the asset was. Always check the base: calculating it over a full month is not the same as over the days operations were active.
Example: an apartment available 30 nights that was occupied 18 has 60% occupancy.
Read the full explanation →

RevPAR — Revenue Per Available Room
What it is: ADR × Occupancy. It combines price and fill rate into one number, which makes it the most honest of the three: a very high rate with very low occupancy produces a poor RevPAR.
Example: with an ADR of USD 100 and 60% occupancy, RevPAR is USD 60. If occupancy fell to 30%, RevPAR would drop to USD 30 even with the same rate.
Read the full explanation →

STR — short-term rental
What it is: renting a home by the night or week instead of by the year. It is the Airbnb-style model, the opposite of a traditional long-term lease. It generates more income per square meter, but also more month-to-month variability.
Example: a leased commercial unit produces the same amount every month; an STR apartment can fill up in high season and sit half-empty in low season.
Read the full explanation →

OTA — online booking platform
What it is: the platforms where guests find and book the apartment: Airbnb, Booking.com, Expedia. They charge a commission on every booking they bring. Being live on them is what makes the asset visible and bookable.
Example: a flawless apartment that is not listed anywhere simply does not sell: the date OTAs go live marks the real commercial start of operations.
Read the full explanation →

RMS — dynamic pricing system
What it is: software that moves the nightly rate automatically based on demand, season, city events, and competitor pricing. It raises rates on high-demand dates and lowers them to avoid empty nights.
Example: a tool costing $200,000 per month that helps raise the average rate from USD 80 to USD 100 pays for itself several times over.
Read the full explanation →

Housekeeping
What it is: cleaning and preparing the apartment between one guest and the next. In short-term rental it is a variable cost: it is paid per checkout, not once a month.
Example: if each cleaning costs $60,000 and there were 18 checkouts in the month, housekeeping totals $1,080,000. Note: in low-occupancy months this cost weighs more against revenue, because cleaning a checkout costs the same whether there are many or few.
Read the full explanation →

How the result is built

Gross revenue (top line)
What it is: literally the top line of the income statement: everything that comes in, before subtracting any cost. It is not profit, it is scale. Useful for sizing the business, never for knowing what was left.
Example: a project can bill $100,000,000 a month and still not be profitable if its costs are $110,000,000.
Read the full explanation →

Reimbursement of costs and expenses
What it is: money returning to the project because someone else owed it or over-charged. It is not a new sale: it is a refund recorded as income because it offsets an expense already booked.
Example: if a supplier over-charged $500,000 and returns it, that money comes in as a reimbursement. It is worth reading separately from operating revenue: it reflects a correction, not commercial activity.
Read the full explanation →

GOP — gross operating profit
What it is: operating revenue minus the costs of running the operation (cleaning, supplies, laundry, platform commissions), before subtracting the property's fixed costs such as rent or taxes. It measures how well the operation itself is managed.
Example: revenue of $20,000,000 minus operating costs of $8,000,000 gives a GOP of $12,000,000.
Read the full explanation →

Result before CAPEX
What it is: the month's normal operating result — revenue minus current costs and expenses — before deducting one-time investment payments. It answers: does the building's day-to-day sustain itself?
Example: revenue of $20,000,000 minus total costs of $26,000,000 gives a result before CAPEX of –$6,000,000.
Read the full explanation →

Adjusted Result
What it is: the month's result after also subtracting CAPEX payments. It answers: how much money actually left the cash account? Both numbers are true at once: one measures operations, the other measures cash.
Example: on the example above, if a CAPEX installment of $5,000,000 was also paid, the Adjusted Result is –$11,000,000.
Read the full explanation →

Structural vs. transitory cost
What it is: a structural cost repeats every month (rent, payroll, security, utilities). A transitory or non-recurring one happens once and does not return. Telling them apart keeps an isolated event from reading like a trend.
Example: monthly rent is structural; the final installment of a setup debt is transitory and disappears from the next month onward.
Read the full explanation →

Break-even point
What it is: the minimum level of sales or occupancy at which revenue exactly covers costs. Below it you lose, above it you gain.
Example: if fixed costs are $25,000,000 per month and each occupancy point contributes $500,000 of revenue, break-even sits at 50% occupancy.
Read the full explanation →

CAPEX — the one-time investment

CAPEX
What it is: Capital Expenditure: money invested one time only to create or improve the asset — furnishing the apartments, buying furniture, setting up operations from scratch. It is not a month-to-month expense; it leaves something installed that gets used for years. That is why it is reported separately from operating costs.
Example: a setup CAPEX of USD 20,000 agreed in 8 installments of USD 2,500 each.
Read the full explanation →

CAPEX repayment and settlement
What it is: each partial payment that pays down that investment. When you see "installment 8/8" it is the eighth of eight — the last one. Settlement is the definitive close: the moment the debt reaches zero and that charge disappears from results.
Example: once the 8 installments of USD 2,500 are paid, the USD 20,000 CAPEX is settled and never appears in later reports.
Read the full explanation →

Claim or offset
What it is: a charge made against a counterparty for something they over-billed or failed to deliver. Instead of waiting for a refund, it is deducted from the balance you owe them. It is a faster, safer way to recover the money: you collect by subtracting.
Example: if USD 3,000 remains payable and there is a USD 1,000 claim for improper charges, the net payment is USD 2,000 and the claim is fully recovered.
Read the full explanation →

The operator and how they are paid

Operator
What it is: the company that runs the asset's day-to-day: listing on platforms, setting prices, receiving guests, coordinating cleaning and maintenance, and reporting results. The owner owns; the operator operates. Changing operators does not change ownership of the property.
Example: when a project changes operators, the handover date creates a cut: part of the period is reported by the outgoing operator and the rest by the incoming one.
Read the full explanation →

Management fee (base fee)
What it is: the operator's fixed compensation, calculated as a percentage of everything the asset bills. It is their payment for managing, whether the project profits or not. It covers their structure and their team.
Example: with a 7% base fee on gross revenue, if the asset bills $10,000,000 the operator charges $700,000 plus VAT — even if the operation is still at a loss.
Read the full explanation →

Incentive fee
What it is: a second fee the operator only earns if there is profit, calculated on GOP. If the operator overspends on cleaning or supplies, GOP drops and their own payment drops with it. That is the point: it aligns their interests with the owner's and pushes them to be efficient.
Example: with a 7% incentive on GOP, a GOP of $2,000,000 earns them $140,000. If their operating costs rise and GOP falls to $1,000,000, their fee falls to $70,000.
Read the full explanation →

Taxes and withholdings

Accrued withholdings
What it is: money the company holds back when paying a supplier and remits directly to the tax authority as an advance on that supplier's taxes. They are not a project expense: they are a third party's money passing through the cash account. Accrued means recorded in the period, even if paid later.
Example: if $10,000,000 is paid to a supplier with a 4% withholding, they receive $9,600,000 and $400,000 goes to the tax authority. The project's cost is still $10,000,000.
Read the full explanation →

Output VAT
What it is: the tax charged to the customer on top of the price and later remitted to the government. It was never the project's income: the project only collects and passes it on. That is why it is reported separately, so performance is not inflated with someone else's money.
Example: a $10,000,000 lease with 19% VAT bills $11,900,000, but the project's revenue is $10,000,000 and the remaining $1,900,000 belongs to the government.
Read the full explanation →

4×1000 tax (GMF)
What it is: Colombia's financial transactions tax, charging $4 for every $1,000 leaving a bank account. It is paid simply for moving money. Small per transaction, but it grows with payment volume.
Example: a $10,000,000 transfer generates $40,000 in 4×1000.
Read the full explanation →

Tourism tax (FONTUR)
What it is: the parafiscal contribution paid by tourism service providers in Colombia, funding national tourism promotion. Operating short-term rental apartments makes the project a tourism service provider under the law.
Example: it is a small percentage of lodging revenue that appears as its own line in the period's cash impact.
Read the full explanation →

Currency and exchange rate

TRM
What it is: Colombia's official peso-to-dollar exchange rate, published daily by the Financial Superintendency. Because it moves daily, reports fix a reference TRM so all conversions in the period are comparable with each other.
Example: with a reference TRM of $4,000, a USD 2,000 payment is recorded as $8,000,000 COP.
Read the full explanation →

Natural hedge
What it is: when a business holds both its revenue and its asset value in the same foreign currency, currency swings offset each other on their own, with no need to buy a financial hedge. The protection comes from how the business is built.
Example: if the dollar weakens, revenue converted to pesos is worth less — but dollar-denominated costs and debts also get cheaper. The hit does not come from only one side.
Read the full explanation →

Offices and flexible workspace

CNR — Client Net Revenue
What it is: the net income the owner receives after the operator deducts all operating costs and its own compensation. The owner does not see gross billings: they receive the already-clean net. In exchange for a smaller share, the operator takes on the risk that the space does not fill.
Example: if the offices bill USD 100,000 a year and the model leaves an 80% margin, the owner receives USD 80,000 — and if occupancy drops, the operating loss is the operator's.
Read the full explanation →

Payback period
What it is: how long a business takes to return, through its own earnings, the money invested at the start. It answers the most direct question in any investment: how long until I get back what I put in?
Example: an initial investment of USD 100,000 generating USD 50,000 a year has a payback of 2 years. From then on, everything is return.
Read the full explanation →

Fit-out
What it is: the interior build-out of a commercial space to make it ready for use: partitions, furniture, cabling, lighting, finishes. Who pays for the fit-out is one of the most important negotiations in a commercial contract, because it is usually a large figure.
Example: when the operator contributes the fit-out, the owner hands over the empty space and does not finance the build-out.
Read the full explanation →

Workstation
What it is: an individual desk within a flexible office or coworking space. It is the unit rented and billed in that model, just as a room is in a hotel. That is why occupancy is measured in occupied desks, not square meters.
Example: a break-even point of 15% of workstations means that with 15 out of every 100 desks occupied the business already covers its costs.
Read the full explanation →

Shell construction and finish-out
What it is: the two finishing stages of a construction project. Shell is the unfinished structure: concrete walls, floors, and ceilings. Finish-out is everything that makes it livable: tiling, paint, bathrooms, kitchens, carpentry, and final finishes.
Example: a project "completed to shell" cannot receive anyone yet; one "completed to finish-out" is ready to operate.
Read the full explanation →

How to read the report's figures

MM (millions)
What it is: abbreviation for millions. "$10.5 MM" means 10.5 million pesos ($10,500,000), not billions. Summaries use it to compare large figures at a glance; detailed tables show the full number.
Example: the same value appears as "$10.5 MM" on the summary card and as "$10,500,000" in the detail table.
Read the full explanation →

Double counting
What it is: recording the same peso twice within a single result, artificially inflating the figures. A serious report states explicitly when it avoids this, because that is how it shows what it presents is incremental rather than repeated.
Example: if a property's costs are already in the operating balance, a new projection must exclude them so they are not counted again.
Read the full explanation →

Reference projection
What it is: the notice that future figures are estimates based on assumptions, not promises. Assumptions may not hold and contracts may still be under negotiation.
Example: when a report says "does not constitute a guarantee of results", it is flagging that the section is a projected scenario, not a recorded fact.
Read the full explanation →

If a figure in the report still leaves you with a question after reading this, write to us. We would rather explain it twice than leave you guessing.