Hotel Feasibility Study in Kentucky

Kentucky hotels: a top class, built on flags

Hotels are the 3 of 39 class in Kentucky's SBA lending, and a 1.39x location quotient shows lodging taking a larger share of Kentucky's SBA approvals than of approvals nationwide. Between FY2017 and FY2026 Kentucky approved 126 hotel and motel loans worth $292.7 million, which ranks the state 28 of 53 for the class. Franchise brands sit behind 82.5% of Kentucky hotel loans, so most deals here are flagged properties. The Kentucky median was $2.0 million, or 0.92x the national hotel median, with loans between the quartiles spanning $1.4 million to $3.2 million. The main points of this page are the class's weight and its lender concentration.

The Kentucky lenders

GBank holds 22 Kentucky hotel loans worth $57.1 million, far more than any other holder. Peoples Bank follows with 11 worth $28.0 million. SBA 7(a) carries 104 approvals and SBA 504 22, the latter shared by Alloy Development Co., Inc. and Capital Access Corporation - Kentucky with 7 each, worth $15.8 million and $13.4 million. Approvals swing widely by year, from 24 in FY2017 to 7 in FY2022 and 16 worth $45.5 million in FY2025.

Kentucky hotel commitments have mostly closed. Kentucky's hotel cancellation floor, for approvals dated FY2017 to FY2024, is 10.5%, and 13.3% when unfunded loans are added. Once funded, none has failed so far: across 70 Kentucky hotel loans funded in FY2017 through FY2021, no charge-off has been recorded yet, a 0.00% floor, and 0.00% again on the five-year view. Those Kentucky readings are floors, set on loans that are still being repaid.

What a Kentucky hotel feasibility study must test

Jefferson holds 12 approvals, Boone 10, McCracken 9, and Fayette and Kenton 7 each, with Oldham, Hardin, Laurel and Madison also in the top ten. A feasibility study must build occupancy and average daily rate from the competitive set, the demand generators near the site and the brand's own performance in comparable Kentucky markets. Cost must cover construction or acquisition, the brand's required improvement plan and furniture replacement. The coverage ratio should hold at stabilized and ramp-year cash flow at a loan that can reach the Kentucky upper quartile of $3.2 million. The appraisal has to value the hotel as real estate, separating business and brand value. One limitation: hotels and motels share a single industry code, so the Kentucky figures do not separate limited-service from full-service properties.