Hotel Lenders Expect To Boost Investment

Jerry Earnest, EVP of the specialty lending group at GMAC Commercial Mortgage, set the tone for the optimistic outlook expressed by the entire panel when he said that his group loaned $850 million on hotel properties in 2004 and expects to increase that by 25% to 30% this year. Panel moderator Robert B. Stiles, managing director and principal at Sonnenblick-Goldman Co., commented that most lenders are looking to increase their investment in hotel properties by 20% to 30% this year, based upon the improvement in the lodging sector and the forecasts for continued growth. Based upon those forecasts, the panel members all said they are optimistic about the hotel industry and the prospect of increased lending, but they also pointed to the intense competition for deals because of the huge amount of available capital. Despite the intense competition for deals, US lenders have access to considerably more market data on which to base lending decisions, noted panelist Mark H. Lanspa, managing director at, GE Real Estate. He contrasted the US market with Asia and Europe, where, he said, less market data is available.

While specific market data is a factor in lending decisions, according to Earnest, the track record of the hotel operator and the quality of the asset itself are the biggest drivers of lending decisions. "We'll go into some challenging markets if the operator is good," he said.

Tuesday's session on lending was one of a host of discussions and presentations on finance and virtually every other facet of the hotel industry at ALIS, which continues through Thursday. The annual event is hosted by the American Hotel & Lodging Association and Burba Hotel Network.