Hotel Feasibility Study in the Madison, WI Metro Area

Madison: hotels eighth, with a tilt toward 504

Hotels and motels take 8 of 39 among Madison's classes in SBA's file, and Madison sits at 93 of 807 among areas. Adding FY2017 to FY2026 together gives Madison 25 loans and $48.4 million. In Madison the class is under-weighted at 0.81x on location quotient, with a $1.9 million median that is 0.88x the national figure.

Loans in the middle half of the Madison range start at $798,000 and top out at $2.8 million. The program tally leans toward 504, with 10 under 7(a) against 15, so 504 carries the larger count. Franchise units are 56.0% of the loans. Dane County holds 16 of the 25 loans. No holder reaches 5 loans in Madison, so no lender is named.

FY2020 shows 0 loans and $0, while FY2024 shows 7 loans worth $16.2 million, a large figure for seven loans. In Madison, a gap means few loans, not none. Cancellation and charge-off rates for Madison are not printed. Flags and tiers cannot be told apart, because hotels and motels sit in one code.

What a Madison hotel study must demonstrate

A median of $1.9 million with a middle half from $798,000 to $2.8 million gives a lender a wide range to measure against, so the study should say where the project sits and why. Occupancy and nightly rate must be shown against what land, building and furnishings cost, with the payment covered at an occupancy below plan. The class ranks 8th locally and the location quotient is 0.81x, so hotels are a middling part of the Madison book. Brand fees, nearby competing properties and the appraisal's income basis all belong in the study.

How the program mix bears on a plan

With 15 of the 25 loans under 504, a plan for a Madison hotel should say whether it assumes a 504 structure or a 7(a) one, because the two lead to different budgets and timing. The page does not describe program rules, only the counts, so a borrower should confirm structure with a lender before sizing. The one printed busy year, FY2024, is a reminder that individual large loans can dominate a small cell.