Workouts & Restructurings + Unsettling Cases + Protecting Guest Data + Hotel Payments & Revenues + Lending Environment

It has been evident that despite the significant challenges and hurdles faced by the lodging industry since the onset of the pandemic, the volume of hotel restructurings and workouts has been a far cry from the volume experienced during the Great Recession. Indeed, the factors contributing to each one of these significant events are completely different; one the result of financial imbalances, primarily in the housing sector and the other caused by an external factor, the coronavirus disease. Interestingly, while the impact on the lodging sector was devastating as a result of COVID-19, there was a common denominator across lenders in the sector that led to a period of "wait-and-see" vs. what was otherwise anticipated to be a period of significant workouts, restructurings, foreclosures, and distressed hotel sales: uncertainty. Moreover, significant capital was raised and ready to pickup trades at significant discounts which in most cases never materialized.

There has been much talk of capital on the sidelines poised for hotel investment; but what many hoteliers want to know is how they can actually secure the financing they need now, as continuing concerns about pandemic variants, a tight labor market, and rising construction costs are joined by those about inflation and the higher interest rates intended to tame it.

Offering the lender’s perspective on how hoteliers can best wade into these murky waters are Michael Harper, senior vice president, Stonehill, a direct hospitality lender, and Michael Sonnabend, managing member, PMZ Realty Capital, a provider of capital to the hotel and lodging community. These experts discussed underwriting considerations, how they have applied lessons learned from the pandemic, and their advice on how prospective borrowers can improve their chances of successfully securing the funds they need.