senior vice president of business development
Access Point Financial Inc.
It’s Time to Upgrade
Hoteliers are in the market to finance brand-mandated renovations
commercial mortgage brokerS
who work with hotel deals may spot a
growing need for the financing of renovations in the market this year. Franchisees of hotel brands seem to be under
growing pressure to carry out upgrades
that keep them within brand standards.
This requirement for brand-man-
dated refreshes, known as product-
improvement-plans (PIP), was put off
in the downturn as hotels’ franchisees
were double-squeezed by tight lend-
ing and curtailed spending by travel-
ers. This delay in PIP investment has
resulted in a substantial backlog in
hotel upgrades, improvements and re-
freshes that must be implemented in
the next couple of years — a backlog
that’s expected to create a demand for
industry-specific financing.
• Innovative Funding • Loan Amounts from $250,000 to $10M • A, B & C Properties • Fast Efficient Processing • Nationwide Lending and Pricing • Broker Rebate Available
CONTACT US TODAY!
888-890-3457
signs of recovery this past year. Rev-enue-per-available room (RevPAR) in
the U.S. was predicted to increase by
8.1 percent in 2011, and by another 6.2
percent this year, according to research
company PKF-HR. Although the industry is not completely out of the woods,
brands have demanded that hotels
quickly conform to their contractually required upgrades. These include
renovations such as replacing worn
furniture, fixtures and equipment and
introducing new concepts — for example, in lobby design.
When savvy mortgage brokers work
with local hotel owners to find viable
options for financing, they can create
value in their advisory role by considering the following:
1. credit is king: Borrowers typically
provide a personal guarantee on
these loans, so be sure that the hotelier’s credit score is higher than 700.
2. experience counts: Seek a lender that
is familiar with the hotel industry and
is willing to provide past references.
3. watch for special interest: Be cautious of funding sources that are
also owners or operators of hotels.
4. right fit for franchisors: A lender that
comes highly recommended by the
franchisor will be most familiar with
the specific brand requirements.
5. budget carefully: It is strongly recommended to include a little extra
for unplanned issues that inevitably
arise. It is always preferable to have
a budget cushion than to ask the
lender to increase the loan.
6. complete a post-renovation pro
forma: Create a pro forma that reflects the new RevPAR as a result of
the renovation. Projected hotel performance after renovation is important to the lender.
Currently there are less than a handful
of lenders with in-depth renovation and
bridge-financing experience. These lenders typically will work with qualified franchisees of major hotel brands throughout
the United States. That is why it is important for brokers to develop strong relationships with franchisors and position
themselves to take advantage of this
market opportunity. •
VISIT US AT BOOTH 604
AT THE MBA CREF
IN ATLANTA
888-890-3457
www.apartmentbank.com
12777 High Bluff Drive, Ste. 100,
San Diego, CA 92130
Jon S. Wright is president and CEO and
Heather Duvall is senior vice president of
business development at Access Point
Financial Inc. They have more than 40 years
of combined experience in the hospitality
industry. With alliances with top-tier hotel
companies, Access Point Financial expects
to originate nearly $1 billion in loans by
2014 and welcomes broker participation. It
offers CapEx/Bridge loans up to $5 million
and select mortgage financing. Reach them
at jwright@accesspointfinancial.com and
hduvall@accesspointfinancial.com.
