The result of this conversation was a very simple matrix made up of 4 things: price, utilization, operational expenses and capital expenses. The matrix is a tool useful in making strategic decisions: what operational and capital expenditures create a sustainable and commensurately larger increase in either price or utilization or both and which do not. Does renovating a floor of hotel rooms increase the number of room nights sold or the rental rate? What about a raise for the hospitality staff, a new IT system or a new ad campaign? AFFO is a useful metric because it relates the expenses required to run a business (opex) and the investments required to build, sustain and grow the business (capex). It gives a more complete picture of both the short and long-term financial health of an enterprise.