Buying a hotel?

A hotel combines a trading business with a substantial property asset — rooms, food and beverage, events, and the freehold itself. For a buyer, that combination makes hotels one of the most substantial and financeable acquisitions in the market. Occupancy rates, RevPAR, and the mix of leisure and corporate trade are the numbers lenders focus on alongside the property value — and how those figures are presented makes a significant difference to the terms available. Specialist lenders with genuine hospitality property appetite assess trading performance and asset value together rather than treating a hotel purely as a commercial mortgage transaction.

What lenders look at

Occupancy rate and RevPAR are the primary trading metrics. Lenders will examine the trailing twelve months of occupancy data, the average daily rate, and the revenue per available room — RevPAR — which is the single most important performance indicator in hotel underwriting. A hotel consistently achieving occupancy above sixty-five to seventy percent with a strong and growing RevPAR trend is a significantly more fundable proposition than one with variable occupancy and a declining rate. Lenders will also assess the seasonality of the occupancy profile — a hotel with relatively even occupancy across the year is more resilient than one heavily dependent on a short peak season.

The income mix between rooms, food and beverage, and events is assessed alongside occupancy. Room revenue is the most fundable income stream — it is directly tied to the physical asset and generates the strongest contribution to debt serviceability. Food and beverage income, events and conferencing revenue, and any spa or leisure facilities add further income and margin that lenders assess positively. A hotel generating a diversified income mix across rooms, restaurant, and events is a more resilient proposition than one entirely dependent on room revenue — particularly where the food and beverage operation attracts non-resident customers and adds external income to the business.

The property is assessed as the primary security alongside the trading business. Hotel acquisitions are almost always secured against the freehold property — the building, the land, and the fixtures and fittings. Lenders will commission an independent RICS valuation of the hotel on both a trading and a vacant possession basis. The trading valuation — which reflects the hotel's value as a going concern — is typically higher than the vacant possession value and is the figure most relevant to the funding structure. The condition of the property, any outstanding maintenance requirements, and the age and condition of the bedroom and public area fit-out are all assessed as part of the overall property assessment.

Branding, management, and the operator's experience are reviewed alongside the financial performance. Where the hotel operates under a franchise brand — Premier Inn, Best Western, IHG, or similar — the brand agreement, its remaining term, and the incoming operator's ability to maintain the franchise relationship are all assessed. Where the hotel is independent, the operator's hospitality experience and management track record are particularly important — lenders will want to understand who will be running the hotel day to day and whether the management capability is in place to maintain occupancy and RevPAR after the ownership change.

How we help

We are acquisition finance and loans brokers, not lenders. We package your application, present it to the funders with genuine hospitality property appetite, and manage the process from first conversation through to completion.

We also arrange government-backed facilities for hotel acquisitions — helping buyers access up to £2 million toward their purchase where the criteria are met.

Every hotel acquisition is different. Tell us about the business. We will take it from there.