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Underwriting Basics of Hotel Lending

westinFinding the right hotel lending solutions can boost your profitability in the competitive marketplace. Understanding the complex hotel underwriting process can be a good first step toward qualifying for the funding you need to expand or to refinance your hotel. Here are some key points to remember about your hotel financing options and the best ways to qualify for underwriting for your hotels and other commercial properties.

Flags and Franchises

Hotels with recognizable names are more likely to attract customers and achieve profitability than comparable properties not affiliated with a franchise. Known as flagged hotels, these franchise enterprises offer added assurances to your guests of consistent quality and reliable service. Your chances of achieving favorable terms for your hotel financing arrangements are greater as part of a well-known chain or national franchise. If your franchise agreement is up for renegotiation in the near future, you may be best served to extend your franchise agreement early or to discuss terms with your lender to determine the best course of action for refinancing your hotel.

Location

A desirable location can also help you qualify for hotel refinancing arrangements. Your underwriter will look at the real value of the property as well as its revenue-generating potential. This can significantly affect your ability to achieve refinancing on reasonable terms and could increase your opportunity for success in this complex process.

Historical Performance

Traditional hotel underwriters also look at the current and historical performance of the hotel to determine whether hotel lending options are a risk-appropriate choice for the lending company. In some cases, working with a real estate private equity firm can provide greater flexibility and added options for hotel owners. These investment companies can typically accept greater risk and may be more likely to approve your hotel refinancing application.

Equity

The amount of equity you have accrued may also play a role in the ease with which you can obtain underwriter approval for your hotel refinancing application. Providing your lender with complete documentation on the status of your current loan can ensure that your application receives the consideration it deserves.

At Stonehill, we specialize in providing creative lending solutions for the hospitality industry. We offer debt financing, refinancing, funds for acquisitions and for renovations and all your other hotel lending needs. Our extensive experience and flexibility make us an excellent choice for refinancing debt or accessing cash for needed renovations to your hotels. If you need permanent, mezzanine, bridge or preferred equity loans, give our team members a call today at 713-666-2544 to discuss your situation with us. We look forward to the opportunity to provide the financing your hospitality business requires.