Hotel Feasibility Study in Colorado

A hotel market close to the national pattern

Colorado's hotel lending tracks the class nationally on the measures we use to call a cell distinct. The median loan is $1.9 million, 0.89x the national hotel median, and Colorado's cancellation and charge-off floors stay inside our margin as well, judged against Colorado's all-asset book and hotels across the country. That leaves the state's structure as the story: 366 approvals and $805.3 million over FY2017 to FY2026, rank 11 of 53 among states, the class at 6 of 39 in Colorado and a location quotient of 1.19x.

Loan sizes sit tight around the Colorado median: the middle half ran from $1.1 million to $3.1 million. Franchise flags account for 52.7% of loans. Volume has moved around, with 40 approvals worth $103.8 million in FY2022, 21 worth $54.3 million in FY2023 and 33 worth $84.5 million in FY2026.

504 depth and a distinct 7(a) lender group

SBA 504 carried 94 Colorado hotel approvals and SBA 7(a) 272. B:Side Capital is the current holder of 55 of the 504 loans, worth $110.9 million, with Pikes Peak Regional Development Corporation at 18 worth $40.7 million; Mountain West Small Business Finance follows at 9 Colorado hotel loans worth $29.3 million. The 7(a) side is led by Bank of Hope with 43 loans for $87.8 million, Open Bank with 39 for $88.5 million and Hanmi Bank with 38 for $73.9 million, followed by PromiseOne Bank with 21 and PCB Bank with 18. A borrower seeking 7(a) hotel money in Colorado will find that a small group of lenders writes much of it.

Colorado hotel outcomes have been good. Cancellation reached a floor of 8.1% among approvals from the FY2017 to FY2024 years, and 8.7% at the ceiling. Colorado hotel charge-offs stand at 2.0% to date for the 196 loans funded in FY2017 through FY2021, and at 0.00% for their first five years, so every recorded Colorado hotel loss came after year five. These are floors on a cohort still repaying.

What a Colorado hotel study has to test

Demand should be built from the specific travel generators near the site and the rooms already competing for them. El Paso County leads with 59 approvals, Adams has 33 and Jefferson 30, while Denver and Pueblo hold 25 each and Lincoln County 16. Cost needs a property improvement plan where a flag is involved. Debt service coverage has to hold on a realistic average rate and occupancy for that submarket rather than a statewide figure, and the appraisal must separate real property from the business and the franchise. Because one code covers hotels and motels, limited service and full service cannot be told apart, and a study cannot lean on this page to compare a full-service hotel with a roadside motel.