Hotel recovery threatened by lack of financing
The hotel sector has weathered the COVID-19 crisis thanks to support from its lenders, but its recovery is being threatened by the caution being displayed by traditional lenders.
In a webinar on hotel financing held by HVS, law firm Bird & Bird, publishing group EP Business in Hospitality and advisory firm AlixPartners, a number of attendees acknowledged the difficulty in obtaining hotel finance, with only a few high street banks currently lending into the market. While these lenders are expected to return once cashflows improve, financing is likely to become more diverse as alternative lenders tolerate a greater degree of risk, albeit at a higher cost to the borrower.
Most attendees expect a 0.5 percent to 1.0 percent increase in debt pricing compared with pre-COVID-19 levels, with debt funds predicted to become the most active lenders in 2021 and 2022. A majority of attendees also believe that resort hotels, aparthotels and limited-service hotels will find it eas