Size a hotel deal from ADR, occupancy, and cap rate.
Enter the operating metrics and we'll return property value, max loan at LTV, monthly debt service, and a DSCR check against the 1.30× hotel underwriting minimum. Built for flagged, boutique, and independent properties.
How hotel underwriting works
Hotels are different from every other commercial asset class because they have operating risk on top of real estate risk. A stabilized multifamily has signed leases; a hotel re-sells its rooms every single night. That's why hotel debt is priced wider, sized tighter, and underwritten on operating metrics — not just an appraised value.
The chain: ADR → RevPAR → revenue → NOI → value → loan
Hotel sizing always follows the same flow:
- Room revenue = Rooms × ADR × Occupancy × 365
- Total revenue = Room revenue × (1 + F&B/other ratio)
- NOI = Total revenue × NOI margin (typically 18–40% depending on service tier)
- Property value = NOI ÷ Cap rate
- Max loan = Value × Max LTV (typically 60–75%)
- DSCR check = NOI ÷ Annual debt service (must hit 1.30×+ for most lenders)
The calculator above runs this chain live. The two most sensitive inputs are occupancy and NOI margin — small changes there move max loan amount substantially.
NOI margins by hotel type
- Limited service (Hampton, Holiday Inn Express, Fairfield): 35–40%
- Select service (Courtyard, Hilton Garden Inn): 28–32%
- Full service (Hilton, Marriott, Hyatt): 22–28%
- Boutique / independent: 18–25% (more variable)
- Extended stay (Residence Inn, Homewood): 38–45% (highest margin)
Cap rates by tier and market
Cap rates compress in stronger markets and on better-flagged properties. Rough current ranges:
- Limited-service flagged, top-25 market: 7.5–8.5%
- Limited-service flagged, secondary market: 8.5–9.5%
- Full-service flagged, top market: 7.0–8.5%
- Independent / boutique: 9.0–11.0%+
- Tertiary / rural: 10.0–12.0%+
What this calculator doesn't model
We're computing a stabilized DSCR check on current operating metrics. For acquisitions, lenders also examine:
- Smith Travel Research (STR) data — your performance relative to comp set (Index)
- PIP scope and cost (mandatory franchise renovations on brand transfer)
- Sponsor's hotel operating experience (lenders require hospitality track record)
- Franchise approval (for flagged properties — a separate, non-trivial process)
- Interest and FF&E reserves (3–5% of revenue typical, lender-required)
- Seasonality and market trends (especially in resort and corporate-dependent markets)
Caplli specializes in hotel financing — flagged, boutique, and independent — from acquisitions to construction to PIP capital. Submit your deal with a recent T-12 and STR report; we'll match it against active hotel lender appetite and typically have indications within 5–7 business days.
Hotel financing — frequently asked questions
How are hotels valued for financing?
Lenders value hotels using the income approach: stabilized NOI divided by a market cap rate. Cap rates for hotels typically range from 7.5% (top-tier flagged limited-service in strong markets) to 11%+ (independent properties in tertiary markets). Value can also be cross-checked using a price-per-key benchmark — limited-service hotels often trade at $80K–$150K per key, full-service at $200K–$500K+.
What LTV can I get on a hotel loan?
Maximum LTV depends on flag, market, and execution. Flagged limited-service hotels in strong markets can hit 70–75% LTV with bank or CMBS execution; mid-tier select-service usually 65–70%; full-service and boutique typically 60–65%. SBA 7(a) can go higher (up to 90% with strong sponsors), but only for owner-operator deals. Bridge lenders go 65–70% on acquisitions but 80%+ of cost on construction or PIP-heavy deals.
What DSCR do hotel lenders require?
Hotel underwriting standard is 1.30× minimum DSCR at stabilized NOI, with most lenders preferring 1.35–1.40×. Full-service and boutique hotels often need 1.40–1.50× because of operating volatility. Bridge lenders may close to 1.20× at acquisition if the value-add plan shows clear path to 1.35×+ within 24 months.
What's the difference between ADR, occupancy, and RevPAR?
ADR (Average Daily Rate) is the average price per occupied room. Occupancy is the percentage of rooms sold. RevPAR (Revenue Per Available Room) = ADR × Occupancy, and it's the single metric hotel lenders watch most closely because it captures both pricing and demand. A hotel with $150 ADR at 70% occupancy has the same RevPAR ($105) as one with $175 ADR at 60% — but very different operating economics.
How much does it cost to finance a $10M hotel acquisition?
On a $10M acquisition at 65% LTV ($6.5M loan), expect: loan origination fees of 0.5–1.0% ($32K–$65K), franchise transfer fees (varies by flag, $25K–$150K), third-party reports (appraisal, environmental, engineering — $20K–$40K total), legal ($25K–$75K), and typical lender-required reserves (FF&E reserve at 3–5% of revenue, interest reserves for any PIP work). Total transaction costs typically run 2–4% of the loan amount.
Can I get financing for a hotel construction or PIP?
Yes — hotel construction is a specialized debt product (typically 18–36 month interest-only term, then refinanced into a take-out). LTC (loan-to-cost) of 60–70% is typical, with sponsor equity of 30–40%. PIPs (Property Improvement Plans, usually mandated by the franchise on a brand transfer) are commonly financed alongside the acquisition loan or as a supplemental — typical PIP cost is $15K–$50K per key depending on the brand.
Hotel deal in process?
Caplli is plugged into the hotel-active lender network — bank, CMBS, debt fund, SBA, and bridge. Send us your T-12 + STR and we'll come back with executable pricing in days, not weeks.