In the last 12 to 18 months, we have seen unprecedented demand for our stabilisation product on the purchase or refinancing of hotels and leisure facilities.

The hospitality sector had a tough time during the Covid pandemic, with lockdown restrictions forcing hotels, restaurants, and leisure facilities to close their doors, removing their ability to trade.

But now, the sector has very much bounced back.

A lack of trading history can be an issue for lending on hotels

Hotels are enjoying strong demand, supported by the significant rise in the cost of overseas holidays that are forcing many to stay at home rather than venture abroad.

However, clients face challenges when attempting to raise finance on vacant or distressed (loss-making) hotel and leisure facilities, as they can’t demonstrate any historic trading to support affordability.

This will typically mean that mainstream banks and term lenders cannot support the acquisition. As a result, borrowers are more often looking to short-term bridging or structured finance lenders to support the initial acquisition of the property.

We have a flexible approach to lending in this sector

When reviewing a proposal to fund a hotel, whether as a distressed purchase or a simple refinance, we feel it’s important to understand key details such as:

• The hotel’s location
• Occupancy levels and room rates
• The borrower’s experience in the sector.

Our stabilisation loan allows clients to purchase a vacant hotel, modernise the facilities to increase demand and improve occupancy rates, and then ultimately exit onto a term mortgage once affordability is evidenced.

In this type of scenario, we will underwrite on a sound business plan supported with financial projections. These will demonstrate to us, as a lender, that the client understands the sector and can turn trading around.

Seasonality can play a big part in the hotel and leisure industry. So, it’s important to understand a client’s plan to maximise returns during the busy summer season, against the backdrop of the quieter winter months.

The top performing hoteliers will incentivise guest stays during the slower periods, utilising the hotel’s key selling points, or offering something in addition to the norm, such as food and beverage discounts.

Our market expertise means we can provide lending solutions in a range of scenarios

At Ortus, we have experience in supporting hotel purchases at the lower end of the market, right up to £25 million London Mayfair hotels.

We can fund simple ownership structures, right through to complex offshore organisations, which can be common when supporting funding on larger hotel purchases.

Our team of Relationship Directors are based across England, Scotland and Northern Ireland. They will work with your clients to structure a bespoke facility to meet their requirements, offering periods of interest retention to support initial growth when occupancy is increasing.

We value personal relationships and often meet borrowers on-site to go through their business plans.

Get in touch

We offer a range of products, from a three-year stabilisation loan through to a five-year commercial mortgage, that are tailored to offer flexibility in supporting all funding scenarios on hotels and leisure facilities.

If you’d like to find out more or you have a specific case you would like to discuss, give us a call.