Hotel Feasibility Study in New York

New York is a thin hotel market by SBA standards. Its location quotient for hotels and motels is 0.51x, so lodging carries far less weight here than it does nationally, and it ranks 11 of 39 among New York's classes. The state approved 369 lodging loans over FY2017 to FY2026 for $866.3 million, 9 of 53 among states. The median is $1.9 million, or 0.88x the national median for lodging, and the middle half spans $711,000 to $3.8 million. On our distinctness margin, no headline measure lifts this cell clear of both New York and the class, but cancellation and charge-off both deserve a lender's attention.

High cancellation, almost no charge-offs

First, cancellation. Of FY2017 to FY2024 approvals, 16.2% were cancelled after approval, or 16.5% with undisbursed loans included, above the national rate for hotels and in line with New York's own habit. Second, losses: of 172 loans disbursed in FY2017 to FY2021, just 0.58% have ended in charge-off, and the five year rate is 0.00%, below both the state and the class. In plain terms, New York hotel deals often fall apart before closing, but the ones that close have paid. Both rates are floors.

Upstate counties and a dominant development company

The geography is not what most readers would expect. Warren County leads with 28 loans, followed by Onondaga and Queens at 26 each, Essex (18), and Erie and Suffolk at 15; New York County has 12. Empire State Certified Development Corporation dominates the 504 side with 97 loans for $200.8 million, out of 108 under that program against 261 under 7(a). The leading 7(a) lenders are NewBank (30 loans, $144.2 million), Hanover Community Bank (29 loans, $73.7 million), Peapack Private Bank and Trust (14), Beacon Bank and Trust (13) and The Bank of Princeton (11 loans, $43.0 million). Franchise properties account for 46.3% of loans. Volume has slipped from 50 a year in FY2018 and FY2019 to 26 in FY2025, with 34 in FY2026.

Questions a New York hotel study must settle

Because so many approvals here never close, the study should address the issues that tend to stop a deal after commitment: a construction or renovation budget the contractor will hold, the brand's approval and improvement plan, the borrower's equity, and an appraisal that supports the loan. Demand for a property in a seasonal upstate county must be modeled month by month, with peak and shoulder periods separated, while a city site has to face its own supply pipeline. Coverage of the debt should be tested on the slowest season, not the annual average. The appraisal must split real property from personal property and business value.

On the data: hotels and motels sit in one code, and the record cannot separate limited service from full service properties.