Hotel Financing 101: Understanding lender metrics, market trends and capital strategies
Hotel Financing 101: Understanding lender metrics, market trends and capital strategies
https://hotelsmag.com/news/hotel-financing-101-understanding-lender-metrics-market-trends-and-capital-strategies/
Story contributed by Christopher Cornella, VP of business development, US Professional Funding & US Medical Funding.
Hotels represent a special case for commercial real estate financing. Unlike office buildings or multifamily residential properties, hotels are operating businesses whose value depends heavily on performance metrics such as occupancy rates, average daily rate (ADR), and revenue per available room (RevPAR). This dual characteristic creates the necessity for the use of a more complicated approach to hotel financing by both lenders and borrowers.
Whether financing a small independent hotel or a full-service luxury resort, securing the right funding is one of the most important decisions hotel owners face. Poorly structured financing can erode profitability and hinder long-term growth, while a well-designed capital structure can support expansion and maximize returns.
Key Metrics Lenders Analyze
Lenders in the hotel space speak a distinct language. Understanding these metrics —and knowing how to present them—can be the difference between approval and rejection.
1. Debt Service Coverage Ratio (DSCR)
DSCR is the single most important metric in hotel underwriting. It measures the property’s net operating income (NOI) against its annual debt service. Most lenders require a minimum DSCR of 1.25x, meaning the hotel generates $1.25 in NOI for every $1.00 in debt payments. Conservative lenders may require 1.40x or higher for riskier assets or markets.
2. RevPAR and ADR Trends
Revenue per Available Room (RevPAR) is the hospitality industry’s primary performance benchmark, calculated by multiplying occupancy rate by average daily rate (ADR). Lenders compare your hotel’s RevPAR index (your share of the market vs. your competitive set) to assess competitive positioning. A hotel consistently outperforming its comp set commands better financing terms.
3. Net Operating Income (NOI) Stabilization
Lenders underwrite to a stabilized NOI—typically a conservative projection of what the hotel can sustain over time, not peak performance. They will apply expense load factors, management fee assumptions (usually 3–5% of revenue), and FF&E reserves (typically 4–5% of revenue) to arrive at their own underwritten NOI, which may differ from your projections.
Pro tip for borrowers: Before approaching lenders, commission a STAR Report from STR (now CoStar) to benchmark your hotel’s occupancy, ADR, and RevPAR against the competitive set. Lenders will request this data—having it ready with your own analysis signals sophistication and accelerates the underwriting process.
Emerging trends in hotel financing
The hospitality finance market continues to evolve rapidly. Several significant trends are reshaping how hotels access capital today.
1. ESG-Linked Financing
Sustainability is increasingly influencing capital markets. Green loans and ESG-linked credit facilities now offer interest rate reductions for hotels meeting specific environmental benchmarks—energy usage intensity, water conservation, and waste diversion targets. Major brands like Marriott and Hilton have formal sustainability frameworks that can facilitate access to these instruments.
2. Alternative Lender Growth
Debt funds and non-bank lenders have captured significant market share since 2020, offering speed and flexibility that traditional banks cannot match. Many operate with higher risk tolerance, accepting transitional assets, non-stabilized hotels and creative deal structures that banks would decline outright.
3. Lifestyle and Boutique Hotel Premium
Independent lifestyle hotels—particularly in experiential travel destinations—are attracting strong investor interest and favorable financing terms as they consistently outperform branded peers on ADR and guest satisfaction metrics. Lenders have become more comfortable with independents that demonstrate strong direct booking profiles and differentiated concepts.
4. Rising Construction Costs Impact on Development
Construction cost inflation has fundamentally altered hotel development economics. Many projects that were penciled three years ago no longer achieve the required returns at current build costs. Developers are increasingly pursuing adaptive reuse (office-to-hotel conversions), selective renovations of existing inventory, and markets with supply-constrained dynamics to justify development financing.
Practical Advice for Borrowers
The most successful hotel financing outcomes are driven by preparation, positioning, and the right advisory team. Consider the following principles:
• Know your story: Lenders finance people as much as properties. A clear narrative about your track record, your business plan, and your market thesis instills confidence.
• Work with a hotel-specialized broker: A mortgage broker with deep hospitality expertise accesses lenders you cannot reach directly, runs a competitive process, and understands how to package your deal favorably.
• Maintain clean financials: Three years of clean, audited, or reviewed financial statements dramatically speed up underwriting and reduce credit risk adjustments.
• Understand your franchise agreement: PIP obligations, renewal terms, and termination provisions directly affect lender appetite. Know your obligations before you enter a financing process.
• Plan for reserves: Most lenders require funded reserves for FF&E, taxes, and insurance. Understanding your total capitalization requirement (not just the loan proceeds) prevents surprises at closing.
Hotel finance is one of the most vibrant—and profitable—arenas in commercial real estate. That same complexity that makes hotel finance difficult also provides the opportunity: For those who know the capital structure, the vocabulary of finance, and the market well enough, proper financing can completely change an owner’s future.
Whether you are purchasing your first asset, refinancing an already stabilized portfolio, or developing new hotels from the ground up, the fundamentals remain the same: know your numbers, understand your market, and build strong relationships with the right capital partners.
America’s 10 Deadliest Beaches Are All in This State
Dmitry Vinogradov/iStock
https://www.fodors.com/world/north-america/usa/florida/experiences/news/photos/americas-10-deadliest-beaches-are-all-in-this-state
Just when you thought it was safe to go back in the water.
Nearly 19 million visitors flock to Florida’s beaches each year, chasing sunshine, surf breaks, and salty air. But a new Tideschart study reveals a darker reality: every one of the 10 deadliest beaches in the U.S. is in Florida. The data—compiled from surf zone fatalities, shark attacks, and hurricane strikes—reads more thriller than travel brochure. And these aren’t remote, wild coastlines. They’re some of the Sunshine State’s most iconic, Instagrammed, and tourist-loved shores. So why do travelers keep coming back? Because Florida, for better or worse, does danger with a view.
PHOTO: Lucky-photographer/Shutterstock
1 OF 10
New Smyrna Beach
WHERE: New Smyrna Beach, Volusia County, Florida
A chilled-out surf town with a gnarly rep, New Smyrna Beach is known as the “Shark Bite Capital of the World.” While most of the 300+ recorded bites come from small, juvenile sharks and aren’t life-threatening, it’s enough to make you think twice about that sunrise swim. Add 12 surf zone fatalities from strong rip currents and rough surf—especially during hurricane season—and it’s no wonder this is one of America’s deadliest beaches. Still, with consistent waves, surfers keep paddling out.
2 OF 10
Laguna Beach
WHERE: Laguna Beach, Bay County, Florida
Just five miles west of Panama City Beach, this quiet, residential stretch may look relaxed—but it’s statistically the deadliest beach in the U.S. With 39 surf zone deaths over 15 years, Laguna Beach outpaces even Florida’s busiest shores. The surf here can be deceptively rough, especially during hurricane season, and with fewer lifeguards and less infrastructure than its tourist-heavy neighbor, risks can escalate quickly. Shark attacks are rare (only nine reported), but strong currents are the real threat.
PHOTO: SEANPAVONEPHOTO/ISTOCK
3 OF 10
Daytona Beach
WHERE: Daytona Beach, Volusia County, Florida
With over 10 million annual visitors, Daytona Beach is one of Florida’s most popular coastal destinations—and one of its riskiest. The beach has seen 27 surf zone deaths and 67 shark attacks, second only to nearby New Smyrna. Surfers, in particular, are often mistaken for prey in the area’s murky waters. Daytona Beach’s wide, driveable shoreline draws big crowds, but strong currents, shifting tides, and limited visibility near piers can create dangerous conditions.
INSIDER TIP: Steer clear of the piers—they attract baitfish, and sharks aren’t far behind.
PHOTO: TOMAS KOZAK/ISTOCK
4 OF 10
Miami Beach
WHERE: Miami Beach, Miami-Dade County, Florida
Known for its vibrant nightlife and rooftop bars, Miami Beach doesn’t often come to mind when thinking about dangerous beach days. But with 13 surf fatalities, 17 shark attacks, and a history of hurricane exposure, it earns its place on the list. Many tourists underestimate the strength of the Atlantic’s currents, especially after a few drinks. Strong rip currents and unpredictable weather conditions make the water riskier than it seems.
INSIDER TIP: Stick close to the lifeguard tower, check for red or purple flags (dangerous marine life), and stay 100 feet or more from piers and jetties.
PHOTO: DOSECREATIVE/ISTOCK
5 OF 10
Indialantic Boardwalk
WHERE: Indialantic, Brevard County, Florida
Despite the laidback atmosphere on the boardwalk, the Indialantic Boardwalk has seen nine surf fatalities and 30 shark attacks over the past 15 years. Indialantic draws both surfers and swimmers, but its strong tides and limited lifeguard presence make safety a more personal responsibility. If you’re not familiar with reading the ocean, it’s easy to get caught off guard by rip currents and swept out.
PHOTO: NIKODASH/ISTOCK
6 OF 10
Cocoa Beach
WHERE: Cocoa Beach, Brevard County, Florida
Famous for its surf culture and Space Coast vibe, Cocoa Beach is also one of the riskiest spots on the coast. With seven surf fatalities and 39 shark attacks, most of them involving surfers far from shore, it’s a spot that demands caution. The beach is especially popular with beginner surfers, which can be risky when rip currents appear, particularly during hurricane season.
PHOTO: SEAN PAVONE/ISTOCK
7 OF 10
Palm Beach
WHERE: Palm Beach, Palm Beach County, Florida
While this beach is pristine and peaceful, the numbers say otherwise. There have been seven surf zone deaths and 35 shark attacks just off these shores—part of a broader 82 attacks reported across Palm Beach County. Earlier this year, a 9-foot great white was pinged offshore. Rip currents here can get nasty in late summer when easterly winds pick up, and calm water can flip fast, dragging you out way farther than you planned.
PHOTO: ANDREW F. KAZMIERSKI/SHUTTERSTOCK
8 OF 10
Miramar Heights Beach
WHERE: Miramar Heights, Florida Panhandle
It might look like a postcard with its sugar-white sand and calm shallows—but Miramar Beach hides a mean streak. At least seven people have died here over the past 15 years, mostly due to sudden drop-offs and powerful rip currents. And while sharks weren’t on most people’s radar, that changed in June 2024 when three swimmers were attacked in nearby shallow waters.
PHOTO: TDOPHOTOGRAPHY/ISTOCK
9 OF 10
Cape Canaveral
WHERE: Cape Canaveral, Brevard County, Florida
Better known for rocket launches than rip currents, Cape Canaveral has quietly tallied six surf zone deaths and 19 shark attacks over the years. Strong currents near jetties, limited lifeguard coverage, and unpredictable surf conditions all contribute to the risks—especially if you’re in less monitored areas.
10 OF 10
Jupiter Beach Park
WHERE: Jupiter Beach Park, Palm Beach County, Florida
Tucked away on Florida’s east coast are the beautiful dunes and relaxing vibes at Jupiter Beach Park. Still, five surf deaths and 23 shark attacks have taken place here over the years. The tides move in fast in this part of the state, and the ocean gets especially turbulent around the inlet.
This Hack Gets Your 10-Year-Old (and Your Family) FREE Entrance to Any National Park
Brocreative/Shutterstock
https://www.fodors.com/world/north-america/usa/experiences/news/the-national-parks-hack-you-need-to-know-this-summer
This might just change the way you travel.
America’s national parks are the country’s majestic crown jewels and include some of the most gorgeous landscapes in the world.
From glaciers and geysers to dunes, deserts, and stunning mountains, the parks showcase the natural beauty of the U.S. with the power to inspire us all. They’re also extremely popular travel destinations: the National Park Service reports a whopping 323 million people visited in 2025.
Vacations built around national parks provide a choose-your-own-adventure experience, allowing children of all ages to explore, learn, and have fun in some truly spectacular settings. And thanks to a little-known federal program, the nation’s fourth-grade students and their families can enter them for free. Every Kid Outdoors is easy to access and is the perfect travel hack.
“It’s such an amazing program, and one of the best-kept secrets for family travel in America,” said Maddi Bourgerie, outdoor enthusiast and travel expert with RVshare, an online recreational vehicle rental marketplace. “When it comes to thinking about how you want to spend time with your kids, introducing them to the idea of being outside has great benefits. Your entire vacation could really be built around it.”
Established back in 2015, Every Kid Outdoors is an interagency collaboration between the Department of the Interior, the U.S. Army Corps of Engineers, the National Oceanic and Atmospheric Administration, and the U.S. Forest Service. The program provides no-fee entry to national parks, wildlife refuges, marine sanctuaries, and forests.
“Connecting young people and families with national parks helps build lifelong relationships with nature, history, and public lands,” a spokesperson from the National Park Service told Fodor’s via an emailed statement. “These experiences support physical activity, curiosity, critical thinking, family connection, and stewardship while helping students see national parks as places that belong to them.”
The NPS says it selected the fourth-grade age range for the program because children ages 9–11 are beginning to understand the world around them in more concrete ways and are better able to connect with nature, history, and the environment.
Stephanie Tevebaugh agrees with that assessment. The mother of two lives near Salem, Oregon, and homeschools both her sons.
“I’d heard of the program from homeschool groups on Instagram, and I knew it was something I wanted to try,” said Tevebaugh.
As soon as her older child started fourth grade, he signed up for the Every Kid Outdoors pass. The family’s first foray into America’s national parks became an epic adventure. They visited the Grand Canyon, Petrified Forest National Park, and Yosemite National Park, skipping all admission fees. Tevebaugh prepared lesson plans about the history, nature, and biodiversity of the areas they were headed to beforehand, injecting academic rigor into the experience. Her boys were sworn in as Junior Rangers, enjoying extra free activities at each park. It all added up to a journey that reshaped how they vacation.
NPS Photo
Since that first road trip, Tevebaugh’s family has visited more than two dozen national parks–large and small–opting to purchase passes when her older son’s year-long Every Kid Outdoors voucher expired. When her younger son enters the fourth grade this fall, he will immediately apply for the program.
“Using the pass just got the ball rolling,” explained Tevebaugh. “I didn’t have national parks on my radar, because we did not go when I was a kid. Just being in Yosemite, it gave me the bug. I remember coming around the corner in the valley and seeing El Capitan for the first time, and I literally teared up. It was just amazing, and I was like, ‘I want to see more of this,’ and then it just happened. All these different places we’ve been to and seen now, honestly, it’s priceless to me.”
Richard Louv wrote his book, Last Child in the Woods, 20 years ago, and in it introduced the concept of nature deficit disorder. The acclaimed author and co-founder of the Children & Nature Network sounded the alarm on increased screen and indoor time among America’s young people, while exploring the many physical and mental health benefits of getting outside, including reduced anxiety, boosted resiliency, and increased creativity.
“This nature connection in childhood, and in fact, for adults, is not a nice-to-have,” stressed Louv. “It’s a have to have.”
After his book was released, Louv says pediatricians began to write literal prescriptions for nature for children in their care. School systems across the country incorporated outdoor time into lesson plans, and nature-based preschools boomed. Indeed, the Every Kid Outdoors program itself sprang from the growing movement, and Louv says it remains a terrific way to incorporate the great outdoors into family vacations.
“This issue of noticing nature is essential,” Louv stressed. “In order to protect something, you have to love it. In order to love it, you have to notice it, and you have to come to know it. The only way to do that is to be aware of it.”
According to the NPS, more than 275,000 kids engaged with Every Kid Outdoors during the 2023-2024 school year. Interested in taking part? The process is a snap. Simply grab your laptop and a favorite fourth grader, then hop onto the Every Kid Outdoors website. Your young person will first take part in a short educational activity, and then download a printable voucher to present for free entry. That’s it; nothing else is required.
About 100 national parks charge entry fees—typically up to $20 per person or $35 per vehicle–so you can easily save a couple of hundred dollars on a summer road trip, especially if you hit multiple major parks like Yellowstone, Yosemite, and the Grand Canyon in a single sweep.
There’s a bit of fine print: the pass grants free entry for fourth graders, all children under 16, and up to three accompanying adults (or an entire car for drive-in parks). Expanded amenity fees, such as camping or boat rides, aren’t covered. It’s valid for multiple uses between September 1 and August 31, so even if you’ve got a current 4th grader closing in on the end of the school year, it’s not too late for your family to reap the benefits of the Every Kid Outdoors pass before the end of the summer.
As for Bourgerie? She already sees the advantages nature brings to her toddler: calming her nervous system, relaxing her, and expanding her curiosity. As soon as her daughter enters fourth grade, she’ll sign up for her own Every Kid Outdoors pass.
“I don’t think people realize how accessible they truly are, and that there are so many benefits for children and families at these national parks,” she said.
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