Will hotel financing loosen in 2023?

Will hotel financing loosen in 2023?

On Behalf of | Mar 1, 2023 | Uncategorized

As many in the hospitality industry know, hotel financing is still frozen, which is to be expected. After all, with the industry upheaval over the past three years and the seemingly ever-increasing interest rate hikes from the Federal Reserve, the hospitality industry just cannot catch a break, even with travel returning to normal.

Industry insiders

According to industry insiders, everything is on hold for at least the next 90 days, but there are grumbles that the second half of 2023 could see some thawing. This is not to say that we will see anything close to pre-2020 volumes, but there are some expectations that the Fed will at least stop raising interest rates and travel rates will continue to rise. In turn, this will reinvigorate the industry and spur reinvestment and acquisitions.

By the numbers

In 2020, hotel investment across the globe accounted for about $32 billion, according to JLL, a hotel industry research agency. In 2021, it was about $73.5 billion, and it 2022 it was $71.9 billion. United States hotel transactions accounted for over half of those numbers in both 2021 and 2022.

The issues

Many in the hospitality industry in Chicago, Illinois, Washington, D.C., and throughout the United States are having issues, whether it is with debt, deferred renovations or labor issues. This is even as travelers are returning to their hotels. Some are forced to cut back on services, including cleaning services, even as their costs are increasing, forcing some to raise their rates. As a result, some are looking to exit the industry or refinance their debt, but as it stands now, they may have to wait until later this year to find their exit or a financial lifeline.