Hotel Feasibility Study in Massachusetts

Massachusetts hotels: small loans, a 504 market

The figure that sets Massachusetts hotels and motels apart is the median loan of $865,000, only 0.40x the national median for the class. Lodging is a minor part of Massachusetts SBA activity (location quotient 0.31x), ranking 13 of 39, and Massachusetts ranks 31 of 53 among states on 107 loans worth $180.8 million over FY2017 to FY2026.

Cape Cod, the Berkshires and the certified development companies

SBA 504 carried 68 of the loans and SBA 7(a) only 39, so in Massachusetts the 504 program, not 7(a), is the main SBA route for hotels. Granite State Economic Development Corporation and Bay Colony Development Corporation hold 16 loans each, worth $35.6 million and $24.2 million; New England Certified Development Corporation holds 14 worth $41.1 million and Cape & Islands Community Development, Inc. 14 worth $14.7 million. Newtek Bank, National Association leads 7(a) with 8. Barnstable County, which is Cape Cod, has 38 loans and Berkshire 20, far ahead of Worcester with 11. The middle half runs $398,000 to $2.4 million, and franchised properties take 26.2%.

Cancellation and loss floors

Cancellations claimed at least 14.6% of the Massachusetts hotel loans approved in FY2017 to FY2024, and the ceiling of 19.1% is well above that floor, meaning a number of recent loans had not yet disbursed. Losses are nil so far: 0.00% of the 47 Massachusetts hotel loans paid out across FY2017 to FY2021 have been charged off, inside five years or after, though open loans keep that a floor. For a lender, the FY2017 to FY2021 loans show no charge-offs; the gap lies in closing and in the time to disburse. For a borrower, the gap between floor and ceiling is worth planning for.

A Massachusetts hotel study has to treat seasonality as the central question: occupancy and rate by month in Barnstable or Berkshire, the competing inns, motels and short-term rentals, and how the property covers debt through the off-season. Cost covers acquisition, renovation and brand requirements if franchised. Coverage of the hotel's payments belongs on a full-year basis at conservative peak and shoulder performance, not on summer months. A hotel appraisal in Massachusetts rests on income, so the study's revenue forecast and the appraiser's must agree. One code covers hotels and motels alike, which means a limited-service motel and a full-service hotel look the same in this data.