While lenders appear to be in lockdown mode for every other typeof commercial real estate, they seem to be more willing to open thevault for established upscale hotels. Financial services firmsbelieve that charm can be extended to new projects, depending onwhere they are located across the country.

"It's just a pure flight to quality in this market," says AndrewColman, vice president with Walker & Dunlop in Bethesda, MD,whose Hotel Finance Group has arranged more than $300 million inloans to hotel development and management companies over the pastyear and a half. The volume of transactions in the luxury hotelmarket is double its normal level, rising from 25% to 50% thisyear, he says.

Walker & Dunlop's latest transaction is a $65-millionrefinancing for the Ritz-Carlton Philadelphia, which the firm saysis based on the hotel's brand, strong asset quality and exemplaryowner sponsorship. Miami-based Gencom Group owns the 303-room,full-service luxury hotel that is designed to resemble Center Citylandmarks related to the nation's birthplace.