Hotel Feasibility Study in the Atlantic City-Hammonton, NJ Metro Area

A shore market with modest hotel loans

Hotels take second place, 2 of 39, among classes financed in Atlantic City-Hammonton, and the area stands 19 of 807 in the national ordering of hotel and motel lending. Headline figure: a location quotient of 4.57x, meaning lodging claims a far larger slice of area lending than it does across the country. Yet the 73 loans, $108.8 million in all from FY2017 to FY2026, are small ones. The $1.1 million median is only 0.53x of the national median for hotels, which suggests an inventory of modest properties, not tower-scale resorts.

Half of all loans fall between $532,000 and $2.4 million. By program, 60 loans went through SBA 7(a) and 13 through SBA 504, so acquisition and working capital financing outweighs fixed-asset debt. Flags are scarce: 13.7% franchise share marks this shore as a market of independents, with fewer brand mandates and also fewer brand reservation channels. The class folds hotels and motels into one code, so a reader cannot split limited-service from full-service product here, and the study must name its own type.

Holders and geography

Sturdy Savings Bank is the leading SBA 7(a) holder, at 12 loans and $14.6 million. Next come The MINT National Bank with 6 loans and $9.8 million and Hanover Community Bank with 5 loans and $5.8 million. These entries record who holds the paper at SBA, not how any bank behaves. Geography is lopsided in an interesting way: Cape May County, NJ has 46 loans while Atlantic County, NJ has only 27. A study for a property on the Cape May side should benchmark against Cape May peers.

Of loans approved from FY2017 through FY2024, 16.9% or more were cancelled after approval, a floor that later data can only raise. Behind the ceiling and the charge-off rate stand too few loans for SBA to publish them, so neither carries a number here and neither means zero. By year: FY2017 had 14 loans and $12.9 million, FY2018 had 8 and $19.3 million, FY2020 had 8 and $13.0 million, FY2021 had 9 and $20.2 million, FY2022 had 8 and $6.8 million, FY2023 had 10 and $20.7 million, and FY2026 had 8 and $6.2 million. Some years are withheld. The metro assignment depends on SBA's county field and the 2023 delineation.

What an Atlantic City area study has to test

Any hotel study here must separate summer shore demand from the shoulder and winter months, then compare room supply across both counties. The acquisition or renovation budget has to be tested against that $1.1 million median, and the model should show occupancy and rate sustaining debt service coverage through the slow season. An independent flagless property gives up distribution that a brand would supply, and the study should price that tradeoff. Appraisers value the running inn and the land beneath it as one assignment. Loan Analytics prepares it under Daniel Smith, MAI, with approval never assured.