Hotel Feasibility Study in the Sacramento-Roseville-Folsom, CA Metro Area

Sacramento lodging: modest volume, one dominant bank

Hotel and motel lending around Sacramento-Roseville-Folsom is modest in volume, 117 approvals worth $328.3 million for FY2017 to FY2026, yet the area still ranks 10 of 807 among all areas, with lodging fifth, 5 of 39, in the local table. A location quotient of 1.17x gives hotels more weight here than in the national mix. Cancellations of at least 8.2% mark the FY2017 to FY2024 approvals, a low floor, and SBA keeps back the upper bound and the charge-off rate, so no numbers appear for them.

The median is $2.4 million, 1.13x the national class median, with $1.1 million and $4.9 million as the quartile edges. Of the total, 79 loans used SBA 7(a) and 38 used SBA 504, a big fixed-asset side. Franchise flags cover 50.4%, so half the book answers to a brand. Hotels and motels share a code here, so the file blends limited-service with full-service and the study must pick one.

Lenders and counties

Pinnacle Bank (CA) holds 25 SBA 7(a) loans and $62.5 million, far ahead of West Coast Community Bank with 9 loans and $19.1 million, Summit State Bank with 8 and $28.5 million, and US Metro Bank with 7. The SBA 504 table belongs to The Mortgage Capital Development Corporation with 16 loans and $49.1 million, and CDC Small Business Finance Corp. trailing at 5. SBA's holder data says nothing about how any of them lends. Sacramento County, CA has 44 loans, El Dorado County, CA 42, Yolo County, CA 24 and Placer County, CA 7.

Approvals started at 8 loans and $13.7 million in FY2017, peaked at 23 loans and $76.4 million in FY2020, and fell to 5 loans and $12.1 million in FY2023 before recovering to 12 loans and $41.2 million in FY2026. A swing that wide shows lodging financing following travel cycles. Sacramento's total keeps only loans whose project county the 2023 delineation can place.

Testing a Sacramento-area hotel

A study should measure room demand from business, tourism and leisure travel across El Dorado, Sacramento and Yolo Counties, map the rooms already open, and estimate construction, renovation and brand costs relative to $2.4 million. Occupancy and room rate have to repay the loan, and an appraiser values the going concern with the property. A lender reading the Sacramento package sees our work; Daniel Smith, MAI, signs his name, and 117 approvals bind no lender.