Hotel Feasibility Study in the Chattanooga, TN-GA Metro Area

Chattanooga lodging: a high-ticket, brand-tied class

Hotels and motels hold the top spot, 1 of 39, around Chattanooga, TN-GA, and the area is 81 of 807 for the class. A location quotient of 2.62x shows lodging at well over twice its national weight in local lending. The $2.5 million median loan is 1.16x the nationwide median, and franchised hotels are 82.1% of loans. For FY2017 to FY2026, 28 approvals total $75.7 million, with 20 in Hamilton County, TN.

Programs, years and the middle band

A span from $1.8 million to $3.4 million holds the middle half of loans, with every loan likely in the millions. The program tally is 21 for 7(a) and 7 for 504, with 21 loans against 7 favoring 7(a) clearly. FY2017 and FY2026 each show no approvals ($0), the latter in a complete year. FY2018 shows 5 loans and $12.6 million and FY2021 shows 5 loans and $6.2 million. No other year prints, as 28 loans cannot fill every year. Lenders are not named for this area.

The one-code limit and the floors

The industry code covers limited-service and full-service hotels alike, so the two stay mixed. Chattanooga: empty cancellation and charge-off cells, as a rate from 28 loans misleads, and a blank is not a zero.

What it means for borrower and lender

With four of every five loans tied to a brand, a lender in this area reads a hotel file next to a franchisor's approval and improvement plan. For a borrower, a typical loan of $2.5 million sets the scale, and the program tally shows both routes in use.

Testing a Chattanooga-area hotel

Revenue should be built room by room from occupancy and rate in each season, with nearby competing supply counted and a ramp that lets a new property settle. The franchise agreement needs reading for fees, required renovations and territory. Show running cost per available room, reserves for furnishings and total development cost set beside the median. Lenders look for equity and coverage that holds at lower occupancy. Hotels are valued on income including the brand, so the study should keep land and building apart from operations and the flag.