Hotel Feasibility Study in Kansas

Kansas hotels: a top class, a smaller loan

Hotels rank 3 of 39 among SBA classes in Kansas, and the location quotient of 1.45x shows lodging taking a much larger share of Kansas SBA lending than of the nation's. Kansas itself ranks 30 of 53 for the class, with 123 approvals and $223.1 million from FY2017 to FY2026. What our screen singles out is loan size: the Kansas median of $1.5 million is 0.70x the national hotel median and stands apart from both Kansas lending across every class and hotels nationally, beyond the margin and sampling noise. Half of Kansas hotel loans fall from $699,000 to $2.5 million.

Brands and the lenders that hold the loans

A franchise flag appears on 69.1% of Kansas hotel loans. SBA 7(a) carries 105 loans and SBA 504 carries 18; Frontier Financial Partners, Inc. is the lead development company, with 8 of the 504 loans worth $16.6 million, and SBA CLSC Servicing is listed as holder of 5 for $4.8 million, a reminder that this table names who holds each loan now, not who made it. Under 7(a), Shoreham Bank holds 8 loans for $21.6 million, Bank of Hope 8 for $19.8 million, GBank 7 for $20.5 million and US Metro Bank 5 for $4.2 million. Sedgwick County leads with 19 loans, Johnson and Thomas follow with 8 each, and Ford and Shawnee with 6 each.

Losses are light so far: of the 45 Kansas hotel loans funded over FY2017 to FY2021, 2.2% have ended in charge-off, with an early-loss floor of 0.00% for the first five years; both move only if open loans fail. Cancellation after approval stands at 11.6% of FY2017 to FY2024 approvals, or 12.6% at the ceiling. Dollars have risen, from 7 loans and $12.8 million in FY2018 to 19 loans and $42.5 million in FY2024 and 17 loans and $34.1 million in FY2026.

What a Kansas hotel study must test

A Kansas hotel study has to prove room demand by segment, highway travelers, business, events and sports, in a market that may depend on a few demand generators. It should test occupancy, average daily rate and RevPAR against the competing set, branded and independent, along the same corridor or in the same town, whether in Sedgwick or a county like Thomas or Ford. Cost covers acquisition or construction, the brand's property improvement plan and furniture and equipment. Debt service coverage should hold at stabilised RevPAR after a realistic ramp and franchise fees. The appraisal will lean on income, so the forecast must reconcile with it. A Kansas caveat on the data: SBA records every lodging borrower here under a single hotel and motel code, which leaves no way to sort a select-service roadside property from a full-service hotel with a restaurant and meeting space.