Hotel Feasibility Study in New Jersey

New Jersey hotel lending lives at the shore

Cape May County alone accounts for 46 of New Jersey's 180 SBA hotel loans, and Atlantic County adds 27, so this cell is first of all a record of shore lodging. The loans from FY2017 to FY2026 carried $390.1 million at a median of $1.8 million, 0.82x the national hotel median, and the middle half spans $637,500 to $3.6 million. New Jersey sits 22 of 53 among states for hotel lending, hotels place 10 of 39 among New Jersey classes, and the location quotient of 0.47x means lodging weighs less in New Jersey's SBA book than in the country's. Geography and the lender mix carry the story.

Who finances New Jersey hotels

Trenton Business Assistance Corporation holds 26 of the 37 SBA 504 loans, for $61.8 million, and Empire State Certified Development Corporation 9 for $23.1 million. Among the 143 7(a) loans, Hanover Community Bank holds 25 worth $61.0 million, Peapack Private Bank and Trust 11 worth $23.4 million, Sturdy Savings Bank 12 worth $14.6 million and Fulton Bank, National Association 9 worth $27.3 million. TD Bank, National Association also holds 9, but they total only $410,000. A brand stands behind 37.8% of the loans, leaving most New Jersey hotels independent. Behind the shore counties come Burlington with 18 loans, Camden with 13 and Monmouth with 11.

Repayment has been clean so far: the 93 New Jersey hotel loans funded during FY2017 to FY2021 have no recorded charge-off to date and none inside the first five years, both at 0.00%. That floor can still rise as New Jersey loans age. Cancellation is where deals fail: 15.0% or more of the hotel deals New Jersey lenders approved in FY2017 to FY2024 never went ahead as approved, and 16.3% at the ceiling. Volume has fallen from 31 loans and $50.3 million in FY2017 and 28 and $57.4 million in FY2018 to 7 and $15.2 million in FY2024, recovering to 17 and $36.8 million by FY2026.

What a New Jersey hotel study must test

A New Jersey hotel study, especially for Cape May or Atlantic, has to model a seasonal year: peak summer occupancy and rate, the shoulder months, and how deep the winter falls. Occupancy, rate and revenue per available room need testing against the hotels a guest would compare at the shore, and the study should weigh any group, event or weekday business that softens the off season. Cost covers acquisition or construction, renovation, and for a branded property the improvement plan. Debt service coverage must hold on the annual cash flow after the winter months, not on summer results, and the appraisal will rest on income, so the forecast and the value must reconcile. Hotels and motels share one code, which means a small shore motel and a full-service hotel sit together in these numbers.