Full service hotel loans.
The basics
A full-service hotel earns from rooms, restaurants, and event space at once, which makes it the most operationally complex property most lenders will finance and the most closely underwritten.
A full-service hotel is several businesses sharing a building. Rooms is one. Food and beverage is another. Banquet and meeting space is a third, and at a lot of properties it is the department that decides whether the year works. A lender is not just financing a building with keys in it. They are financing an operating company that happens to own its own real estate.
That framing explains most of what happens in hotel underwriting. Expenses run higher here than in any other commercial property type, because payroll never stops. A restaurant that breaks even is common. A restaurant that quietly loses money every month while the rooms department carries it is also common, and lenders find it fast. Before we take a full-service file to market, we look at the same departmental detail a lender will, so the quotes that come back are quotes you can close on.
The flag is part of the deal
For branded full-service hotels, the franchise agreement sits alongside the mortgage in a lender’s mind. They want to know how much term is left on the license, what happens to it on transfer, and whether the brand has already issued a property improvement plan.
A PIP is not a problem. An unfunded PIP is. Brands set renovation cycles, and buyers regularly inherit one at closing. Lenders who write on hotels expect this and will often fund the work through a reserve, but they need the scope and the number in front of them early. Deals go sideways when the PIP shows up in week five of diligence and the capital stack was never built to carry it.
How lenders read performance
Hotel income resets every single night, so lenders look for trend rather than a snapshot. They read occupancy, average daily rate, and RevPAR against the property’s competitive set, usually through an STR report. What they are testing is share. A hotel growing rate while its comp set flattens is a very different file from one holding occupancy by cutting price.
Group and corporate business gets its own look. Meeting space and banquet revenue can be excellent, and it can also be concentrated in two or three accounts that could leave. Lenders ask where the demand comes from.
Who actually writes this paper
Hotel lending is a specialty. The lender set is narrower than it is for apartments or industrial, and inside that set the appetites vary by brand, by market, and by whether the property is stabilized. Banks, CMBS, life companies, and private capital all participate. For owner-operators, SBA can also be a fit.
That fragmentation is exactly why shopping the file matters. Two lenders looking at the same hotel can land in very different places. We take it to the ones with a live appetite for what you own, then help you compare what comes back.
What lenders look at.
The things that move a full service file from "maybe" to a real quote.
Departmental performance
Rooms, food and beverage, and banquet each carry their own revenue and their own cost. Lenders read them separately, because a strong rooms department can hide a food and beverage operation that loses money every month.
Operating history in the STR report
Lenders want to see how the hotel has performed against its competitive set over time, not just what it billed last quarter. Occupancy, average rate, and RevPAR trends against the comp set tell them whether the property is gaining share or giving it away.
Franchise agreement and remaining term
The flag is part of the collateral. Lenders check how many years are left on the license, what the transfer terms are, and whether the brand has already noticed the property.
A funded PIP plan
Most full-service files carry a property improvement plan, either now or at the next renewal. Lenders want the scope, the cost, and a clear source for the money before they size the loan.
Management and staffing depth
These hotels run on large teams and a general manager who knows the market. Lenders look at who operates the property day to day, whether that is you or a third-party management company.
How these deals are usually structured.
Every lender prices differently and every file is its own case. Treat this as the shape of a typical full service deal, not a quote.
- Loan amount
- Generally $500,000 and up.
- Common capital sources
- Banks, CMBS, life insurance companies, private money, and SBA for owner-operated hotels. Hotel lending is a specialty and the lender set is narrower than it is for apartments or industrial.
- Typical purposes
- Purchase, refinance, cash-out refinance, PIP and renovation funding, and conversion or reflagging.
- Rate structure
- Fixed and floating both exist on hotel debt. Which one you are offered depends on the lender, the flag, and how stabilized the operation is.
- Timeline
- A soft LOI quote often within 24 to 48 hours once your scenario matches a lender's guidelines, and a hard LOI in one to two weeks.
Terms depend on the property, the sponsor, and the lender. Nothing here is a commitment to lend.
Other hospitality we finance.
Different property, same process.
Or see everything under hospitality.
Loan types we place on full service.
Full service questions.
Still have a question about full service? Start a request and our team will get you an answer.
Full service generally means a hotel with a restaurant, banquet or meeting space, and staffed departments beyond the front desk and housekeeping. The distinction matters to lenders because it changes the expense ratio and the number of ways the property can underperform.
Often, yes. Lenders that write on branded hotels are used to funding a property improvement plan alongside the acquisition, usually through a reserve or a holdback. Bring the brand's scope letter and a contractor estimate and we will shop it that way.
It affects who will look at the file. Some lenders limit themselves to specific brand families, some will write on any recognized flag, and independents route to a different group entirely. We know which lenders take which flags.
SBA programs are built for owner-occupied business real estate, and an owner-operated hotel can qualify. If you are buying the hotel to run it yourself, it is worth pricing. If you are a passive investor with a third-party operator, SBA is not the right path.
The operating statements, the STR report if you have one, the franchise agreement or the brand you intend to fly, and what you are trying to do. That is usually enough for a soft LOI quote within 24 to 48 hours once your scenario matches a lender's guidelines. No credit pull, no cost to start.
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