What Investors Should Know About Hotel Financing

As the economy expands, the hospitality sector is remaining stable and lucrative for investors.  With the market thriving, now is an excellent time to secure financing for your hotel.  However, lenders are incredibly selective when it comes to hotel underwriting, so it's important that investors explore various financing options.  Here are some of the sources of financing that you should consider.

Undertaking a renovation project is a cost-effective way for hotel owners to revamp and refresh their properties.  To finance their project, hotel owners can secure a renovation/redevelopment loan from a bank or debt fund.  Bank loans will typically have recourse terms, which means they will have fewer controls, fewer reserves, and lower rates.  Debt fund loans will be non-recourse, meaning that they are self-contained and include requirements that allow the loan to stand alone.  To secure a renovation/redevelopment loan, borrowers must provide a financial and strategic analysis of the proposed renovation project.

Refinancing loans offer property owners the opportunity to capitalize on their hotel's increased value and secure funding to reinvest in new projects and improvements.  Borrowers can secure refinancing loans from CMBS lenders, debt funds, or life insurance companies.  Before approving a loan, lenders will study the hotel's supply and demand and may adjust the hotel's current operating history depending on local competition and demand.

These are some of the hotel financing options that you should explore.  If you've secured funding for your hotel renovation, then it's important to work with a construction firm that you can trust.  For assistance with your renovation needs, contact us at Parkwest General Contractors.  Our dedicated team is eager to assist you with all your building upgrade needs today.