Hotel Feasibility Study in Alabama

Hotels weigh heavily in Alabama

Hotels matter far more to SBA lending in Alabama than to the national book. The location quotient is 2.48x, so hotels and motels hold a far larger share of Alabama's SBA loans than of the national book, and they rank 3 of 39 among Alabama classes. Alabama itself ranks only 19 of 53 states for hotel loans, with 210 approvals worth $470.4 million from FY2017 to FY2026, so the weight comes from how much of the state's lending hotels absorb. Loan size is close to national: the Alabama median of $2.0 million is 0.94x the class median, and Alabama's middle half runs from $1.1 million to $3.2 million. No Alabama hotel gauge, whether the median, cancellations or charge-offs, stands apart from both Alabama's all-asset record and hotels nationally by our margin.

These are mostly branded hotels. Franchised properties account for 76.2% of Alabama approvals. SBA 7(a) carried 170 and SBA 504 40. The 7(a) holders are spread: GBank and PromiseOne Bank hold 13 each, worth $32.5 million and $16.2 million; Peoples Bank holds 12 worth $36.4 million; HomeTrust Bank 10 and US Metro Bank 8. Alabama's 504 book is led by Florida Business Development Corporation, holding 13 loans worth $33.1 million, Southern Development Council 9 worth $30.2 million, and Birmingham Citywide Local Development Company and Florida First Capital Finance Corporation, Inc. 8 each. Montgomery County leads with 34 approvals, Mobile has 30 and Jefferson 28, with Calhoun, Madison and Shelby next. FY2021 brought 33 loans for $75.3 million, and FY2025 another 24 for $64.0 million.

Alabama hotel outcomes

Cancellations reached at least 8.2% of Alabama's FY2017 to FY2024 hotel approvals, and 9.4% at the ceiling once undisbursed loans are added. Losses are absent so far: of the 114 Alabama hotels funded during FY2017 to FY2021, not one has been charged off, a rate of 0.00% overall and 0.00% inside the first five years. Those loans lived through the pandemic years, which makes the record notable, but it remains a floor on loans that are still open.

What an Alabama hotel study must test

With hotels already this heavy in Alabama, a study has to start with supply. Demand testing means the market's occupancy and rate history, the drivers in the specific submarket (interstate travel, military, universities, medical centers or the coast) and every hotel opened or planned nearby, which differs between Montgomery, Mobile and Jefferson counties. Cost means construction or purchase price, the brand's property improvement plan and franchise fees at current terms. Debt service coverage should be shown at a stabilised occupancy and rate that the brand and the market can support, not the peak of the cycle. The appraisal must value the hotel as a going concern and separate the real estate from the business and the flag.

The data has one limit: Alabama motels and hotels fall under a single code, which leaves limited-service and full-service Alabama properties mixed together in these figures.