Hotel Feasibility Study in the Baltimore-Columbia-Towson, MD Metro Area

Baltimore-Columbia-Towson: large hotel loans, a low local weight

In SBA's Baltimore-Columbia-Towson, MD file, hotels and motels hold 12th place among the area's 39 classes, with Baltimore itself 67th of 807 areas. Share of loans against national share gives 0.31x; the median loan, $3.3 million, is 1.54x the national median. Baltimore accounts for 30 approved loans, $105.4 million in all, from FY2017 through FY2026. From $2.5 million to $5.0 million is where the middle half of Baltimore loans fall. Fewer hotel loans, but much larger ones: that is the shape of the Baltimore record.

Of the 30 loans, 24 are 7(a) and 6 are 504. Franchise units make up 80.0%. Baltimore city holds 8 of the loans, while Anne Arundel County and Baltimore County hold 7 each. A reader should note that Baltimore city is a separate unit from Baltimore County in the area list, so a site must be placed carefully when it is compared with these counts. No Baltimore lender reaches 5 loans, so none appears.

One year and the code

Only FY2021 can be shown, with 5 loans worth $19.8 million, which is a large sum for five loans. Beyond those years, Baltimore volume is too thin to print. In the code, hotels and motels are one entry, so limited-service and full-service properties blur together. Cancellation and charge-off stay unpublished for Baltimore: under 30 loans.

Taken together the Baltimore figures point to a small number of large, branded properties. A rank of 67 of 807 among areas says the volume is real, while a location quotient of 0.31x says hotels are a small part of the local book. For a lender, that means precedent exists but is thin, and each new hotel will be compared with a handful of large past loans, so the study's comparison set of nearby properties carries extra weight.

What Baltimore lodging plans have to establish

With loans of this size, a lender will go through the franchise terms, the brand's required improvements and the set of nearby competing properties. The weight of branded hotels also means a borrower should arrive with the brand's approval status and its improvement costs already priced. The model has to show occupancy and average daily rate producing enough income to meet the payment even when occupancy falls short of plan, and a median of $3.3 million means any request must be explained line by line. Our study gives the lender an independent view of whether the specific site supports the loan.