Lending for U.S. hotel construction is back, hoteliers say

TRD New York /
May.May 09, 2013 11:00 AM

Big-time hoteliers are seeing construction lending come back strong, but less-established developers are struggling because of the strict standards that banks still have in place, the Wall Street Journal reported.

Hotel construction is a risky venture for lenders, but Marty Collins of Gatehouse Capital Corp. told colleagues at a conference this week that Gatehouse and other hotel developers are seeing support in financing. A key factor for change in lending is the issuance of commercial mortgage-backed securities, which are expected to double this year to $80 billion to $100 billion, Trepp LLC told the newspaper.

Construction is surprisingly ramping up in full-service hotels, which feature restaurants and spas, said Alison Cumberland, senior vice president at Marriott.

Because to the lack of new hotel projects since the recession, figures are on par with 2007. Average occupancy is at 57.7 percent, while the average nightly rate is $108.31, according to Smith Travel Research data reported by the Journal.

Research firm Lodging Econometrics predicts the industry will inch up its room base by 1.1 percent this year and 1.4 percent the next. Last year’s growth rate was 0.9 percent, the Journal said. [WSJ]Mark Maurer


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