Hotel and Motel Financing in Texas
Hotel loans are among the most complex transactions in commercial real estate lending. Hotels are simultaneously a real estate asset and an operating business — which means lenders underwrite both the property value and the business performance. That complexity, combined with the hospitality industry’s sensitivity to economic cycles, makes hotel financing a specialized niche that requires lenders with specific experience.
Texas is one of the most active hotel markets in the country, with strong demand driven by energy, tourism, conventions, and corporate travel. Here’s how hotel financing works.
Types of Hotel Loans in Texas
Branded vs. Independent Hotel Loans
Lenders strongly prefer branded hotels (Marriott, Hilton, IHG, Choice, Wyndham, Best Western franchises) over independent properties. The brand’s reservation system, loyalty program, and brand standards provide underwriting comfort. Independent boutique hotels can still get financed — but typically at lower leverage and higher rates.
SBA Hotel Loans
SBA 7(a) loans up to $5M are available for smaller hotel acquisitions where the owner operates the property. SBA requires the borrower to be an active owner-operator — passive investors don’t qualify. Best for limited-service hotels under $5M in purchase price. Minimum 10% down, terms up to 25 years.
Conventional Hotel Loans (CMBS and Bank)
For larger flagged properties with strong RevPAR history, CMBS and bank loans offer competitive leverage (65–70% LTV) and 5 to 10-year fixed terms. Underwriting is based on trailing 12-month NOI, STR report data, and competitive set analysis.
Bridge Loans for Hotel Acquisition and Repositioning
Acquiring a distressed hotel, rebranding from one flag to another, or completing a PIP (property improvement plan)? A hard money bridge loan funds the acquisition and improvement period. Once the PIP is complete and operations stabilize, refinance into conventional debt. Closes in 7 to 14 days.
Key Hotel Underwriting Metrics
- RevPAR (Revenue Per Available Room): The primary revenue metric — occupancy rate × ADR (average daily rate)
- STR Report: Competitive set analysis from STR (formerly Smith Travel Research) — lenders always require this
- NOI and EBITDA: Net operating income after all operating expenses including management, franchise fees, and reserves
- FF&E Reserve: Lenders require a reserve for furniture, fixtures, and equipment replacement — typically 4% of revenue
- Franchise agreement term: Remaining franchise term must typically exceed the loan term
- PIP status: Is a property improvement plan required by the flag? Lenders want to know the cost and timeline
Hotel Loan Terms in Texas
- Loan amounts: $1,000,000 to $30,000,000+
- LTV: 55–70% depending on flag, occupancy history, and loan type
- DSCR: 1.30x to 1.40x minimum — higher than other CRE due to operational volatility
- Terms: 5 to 10-year fixed for stabilized assets; 12–24 months for bridge
- SBA 7(a): Up to $5M, owner-operated only, 25-year term
- Bridge/hard money: 55–65% LTV, 9–13%, 12–24 months
Finance Your Texas Hotel
From limited-service motels along I-10 to full-service hotels in Houston and Dallas, we’ve structured hotel financing across every Texas market. Tell us your property type, flag, trailing NOI, and timeline — we’ll find the right program.
Apply Now — Hotel Loan Pre-Qualification