Hotel Feasibility Study in Arizona

Arizona hotels at national scale

Arizona's hotel book is large in dollars. Between FY2017 and FY2026, Arizona lenders approved 267 SBA hotel and motel loans for $653.2 million; that puts Arizona 15 of 53 among states, and hotels 6 of 39 on Arizona's class list. The median loan of $2.3 million is 1.04x the national hotel median and the location quotient is 1.10x, so Arizona looks much like the national hotel market at a somewhat higher weight; our screen does not flag the cell.

Flags, development companies and specialist banks

Franchise flags are on 63.7% of Arizona hotel loans, and Arizona's middle band of hotel approvals, $1.2 million to $3.5 million, is the range of a branded limited-service property. SBA 504 carries 87 approvals and SBA 7(a) 180. The Mortgage Capital Development Corporation holds 42 of the 504 loans for $102.2 million and Arizona Capital Source 28 for $67.3 million, while CDC Small Business Finance Corp. has 12 worth $25.6 million. Among 7(a) holders, Poppy Bank has 17 loans for $48.9 million, Bank of Hope 14 for $33.9 million, Celtic Bank Corporation 13 for $27.8 million, Summit State Bank 12 for $36.1 million and Open Bank 9 for $31.9 million. Maricopa County leads with 72 approvals, then Pima at 37, Coconino at 33, Navajo at 27 and Mohave at 20, a spread that reaches far past Maricopa and Pima.

Few losses, steady cancellations

Arizona hotel loans have performed well after funding. Of the 130 funded in FY2017 to FY2021, at least 0.77% are charged off, and none within five years of approval, 0.00%. Cancellation is the larger effect: 10.8% of FY2017 to FY2024 approvals at least, 12.2% at the ceiling. Volume peaked in FY2021 and FY2022, with 38 approvals worth $91.7 million and 36 worth $99.1 million, and was 19 loans for $47.0 million in FY2026.

A hotel study in Arizona must earn its numbers county by county, because the book spans Maricopa and Pima as well as Coconino, Navajo and Mohave. In each, demand comes down to which rooms nearby compete for the same guests, at what occupancy and rate, and what new supply is planned. For a conversion or a change of flag, cost is the franchisor's property improvement plan priced by a contractor; for new construction it is a full budget with contingency. Arizona coverage tests should use a stabilised year reached after a realistic ramp, net of franchise fees and a furniture and equipment reserve, then a softer-rate case. An appraiser will split the property from the business and the brand, so the revenue forecast has to reconcile with the competitive set the appraiser chooses.

Arizona motels and full-service resorts sit under the same industry code as limited-service hotels, so no figure here can separate them.