How To Get Financing To Acquire A Hotel
Buying a hotel is not like buying a normal commercial building. Lenders underwrite the real operating business, not just the walls.
If the property is mismanaged, under-branded, or carrying hidden capex, the financing “should” be possible on paper, then dies in credit.
Hotel acquisition financing is a packaging and execution game. If you can show clean historical performance, a credible operator plan, a realistic capex story, and a tight closing timetable, capital shows up. If your file is messy, lenders pass or price you like a rescue deal.
Financely is not a bank and does not lend. We structure the file, run lender outreach, and drive a controlled term sheet process through closing.
1) Start With The Only Question That Matters
What is the plan for the next 12 to 24 months: stabilize, renovate, rebrand, or hold steady? Your answer decides the debt type.
A stabilized flagged hotel can fit bank debt. A value-add hotel with a PIP and operational lift often needs bridge debt first, then a refinance later.
If you are still shaping the purchase strategy, start with our Commercial Real Estate financing overview
and, if timing is tight, review Commercial Real Estate bridge loans
and our bridge financing platform page.
2) The Main Financing Routes
Stabilized Senior Loan
Best fit when cash flow is consistent, brand and management are credible, and capex is limited.
Underwriting leans on historical operating statements, current market comp set, and a conservative view of seasonality.
Expect heavy focus on sponsor liquidity and experience. Hotels are operationally sensitive and many lenders treat them as “management intensive” real estate.
Bridge Loan For Value Add
Best fit when you need speed, light stabilization, renovation, rebranding, or a change in operator.
Bridge debt can close faster, then you refinance into longer-term debt after performance proves out.
This is where a clean capex plan, a tight timeline, and clear sources and uses stop the deal from drifting.
SBA Financing For Smaller US Deals
For US-based acquisitions, SBA programs can be relevant in certain owner-operated or small business cases.
Read the official program pages for baseline rules and eligibility.
Mezzanine Or Preferred Equity
Used when the senior lender caps proceeds and you need to fill an equity gap.
Price is higher, controls are tighter, and the paper gets more negotiated.
If you are short on equity, see our practical notes on gap funding when traditional lenders say no.
The same reality applies to hospitality deals.
3) What Lenders Actually Underwrite
You can sell the story later. First, you must survive credit. Hotel underwriting usually centers on performance metrics, operating discipline, and capex risk.
If your numbers are unclear, you are already losing.
- Trailing performance:
monthly operating statements, T12, and year-to-date results with clean addbacks.
- Demand drivers and comp set:
where the guests come from and who you compete against.
- Revenue quality:
rate integrity, channel mix, group vs transient, seasonality, and concentration risk.
- Operating plan:
operator credentials, staffing plan, brand strategy, and cost controls.
- PIP and capex:
required upgrades, timing, cost certainty, and contingency.
If you want a credible reference point for standard hotel accounting and operating terminology, review the USALI reference material published by HFTP.
4) Build A Lender Ready Data Room
Hotel deals die from slow, chaotic document flow. The fastest path to real terms is a clean data room with a single story across legal, financial, and operational files.
Purchase And Legal
- LOI, PSA, key timelines, and deposit terms.
- Entity structure, ownership, and authorized signatories.
- Licenses that matter for cash flow (for example, liquor license where applicable).
If your lender is asking for a “commitment letter” to keep the seller calm, this guide helps you frame that request: how to secure an acquisition financing commitment letter.
Financial And Operating
- T12 P&L plus monthly detail, segmentation, and explanations for anomalies.
- Capex history, reserve history, and current vendor contracts.
- Management agreement, franchise documents, and any PIP schedule.
Property And Risk
- Property condition items and recent inspection reports if available.
- Insurance history and current quotes where possible.
- Environmental and title work as required by your lender and jurisdiction.
Model And Sources And Uses
- Base case model with seasonality, capex, and conservative ramp assumptions.
- Clear sources and uses, including reserves and working capital.
- Sensitivity cases that match lender concerns.
5) Term Sheet Reality In Plain English
Hotel acquisition terms are driven by perceived volatility. Expect tighter covenants and more lender control than a vanilla office or multifamily deal.
The specific numbers vary by market and cycle, so focus on the structure.
- Cash management:
lender-controlled accounts, sweeps, and reserve build mechanics.
- Capex and FF&E reserves:
real money set aside, not a line item in a spreadsheet.
- Guaranties:
sometimes full or partial recourse, almost always bad-boy carveouts.
- Reporting:
monthly operating statements, brand reporting, and budget variance reporting.
- Exit clarity:
if it is bridge debt, the refinance plan must be credible.
6) Common Deal Killers
- Fantasy underwriting:
aggressive addbacks, “easy” ADR lifts, and capex that is clearly under-budgeted.
- Weak operator plan:
no credible GM, no proven revenue strategy, and no cost control plan.
- PIP denial:
ignoring brand required upgrades until late diligence.
- Slow seller process:
missing documents, conflicting versions, and no single point of control.
- Sponsor fragility:
thin liquidity, no contingency, and no ability to fund reserves when needed.
7) How Financely Helps You Get To Executable Terms
Packaging And Underwriting
We turn the hotel story into lender language: an operating summary, risks, mitigants, capex plan, and a model that survives scrutiny.
We also tell you what will not fly before you waste weeks.
Lender Outreach And Term Sheet Process
We run a targeted lender process so you get real choices, not vague promises.
Bridge, senior, and structured capital are approached based on fit, speed, and your closing timetable.
Execution Management
We manage Q&A, diligence pacing, and term sheet refinement through closing coordination.
When regulated execution is required, we work through appropriately licensed counterparties.
Fallback Structures
If the senior loan caps proceeds, we help design a realistic gap plan, including preferred equity or mezzanine where suitable, so the purchase does not collapse at the equity line.
Request A Hotel Acquisition Financing Review
Share your target hotel details, PSA or LOI, T12 operating statements, and your capex plan. We will revert with a feasibility view and realistic financing routes.
Request Financing Review
Disclaimer: This page is for general information only. It does not constitute legal, tax, regulatory, investment, or credit advice and it is not an offer or commitment by Financely or any third party to arrange or provide financing. Financely is not a bank, lender, broker dealer, or investment adviser and does not custody client funds. Any engagement is subject to eligibility, full KYC and AML review, sanctions screening, credit approval, and execution of formal agreements by regulated counterparties.