Hospitality Market Update – September 2025
By Katie Vivian – Hotel Loan Originator
As we move into the back half of 2025, hotel owners are navigating a financing market that remains active but selective. Here are a few key trends we’re seeing across the capital stack:
Life Companies – Competitive Capital to Place with Certainty of Execution
Our correspondent LifeCo lenders remain very active in the hotel space and have allocated hospitality capital that needs to be placed before year end. They are focused on branded select-service hotels with stable cash flow, offering:
- Fixed rates in the mid-6% range
- 3–20 year terms, 25-year amortization
- Non-recourse execution with no ongoing covenants, no reserves, no lender legal, streamlined closing process
While proceeds are conservative (~55–60% LTV), LifeCos provide certainty of execution with loans fully approved upfront and rates locked at application.
CMBS & Alternative Capital Still Driving Proceeds
For higher leverage requests or transitional assets, CMBS, debt funds, and credit unions remain strong options.
- CMBS is quoting up to 70% LTV with full-term interest only.
- Debt funds are filling the gap for PIP or ramp-up stories, albeit at higher cost of capital.
- Credit unions are attractive for borrowers prioritizing flexibility and lighter prepay structures.
Cost Pressures Affecting Underwriting
Rising insurance premiums, wage growth, and brand-mandated PIPs continue to impact underwriting. Borrowers who proactively address these costs—showing clear capital plans for PIPs and realistic expense forecasts—are finding a more receptive audience.
Outlook
With rates stabilizing and travel demand holding steady, we expect financing activity to remain healthy into year-end. Borrowers who can present clean stories, backed by updated PIP progress and credible expense management, will be best positioned to secure competitive terms.
