LENDERS EXPRESS OPTIMISM, ANTICIPATE INCREASE IN HOTEL LENDING VOLUMES AND VALUES IN ROBERTDOUGLAS' 2021 HOTEL LENDER SURVEY
National Report – February 4, 2021
RobertDouglas conducted its eighth annual lender survey to measure the current state of financing market conditions and ascertain critical future expectations through the lens of the specialist hospitality lending community.
Following a year in which nearly every lender hit 'pause' on new hotel originations and hotel valuations declined almost overnight, hotel lenders show optimism for 2021. Based on survey responses, 63% of lenders are confident in future hotel performance and over 65% expect both hotel lending volumes and values to increase over the next 12 months.
Despite the unique environment today, the old mantra of "location, location, location" still holds true with nearly 50% of lenders indicating that the most important "gating" criteria for hotels is asset location and quality. While location was key, the perceived risk associated with specific locations shifted. For the first time in the survey's history, lenders perceived the most risk in urban locations, as urban hotels struggled with nearly non-existent corporate travel and soaring case counts requiring the most stringent restrictions in city-centers.
Unsurprisingly, over half of the lenders surveyed viewed an economic slowdown or external factors, such as a pandemic, as the biggest threats to hotel loan portfolios. Last year's top response, increases in competitive supply, ranked among the least threatening factors as the hotel development pipeline is expected to contract going forward as a result of the pandemic.
While the ongoing pandemic certainly appeared to influence almost every lender response, the outlook for 2021 and beyond is optimistic and signals more liquidity in hotel lending markets over the coming months.
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RobertDouglas is a real estate investment banking firm with offices in New York, Los Angeles, San Francisco, and Nashville that specializes in the sale, financing, and equity capitalization of hotel, resort, and gaming properties throughout North America. Founded in January 2013 and currently led by its four partners, Rob Stiles, Doug Hercher, Stephen O'Connor, and Evan Hurd, RobertDouglas offers access to exceptional domestic and international institutional investor and lender relationships as it combines the capital markets sophistication of top-tier investment banks with diligent hotel underwriting and proven asset management experience.