Hotel Feasibility Study in Washington

Washington hotel lending is shrinking

The clearest pattern in Washington's SBA hotel data is decline. Approvals fell from 66 loans and $163.8 million in FY2017 to 28 loans in FY2024, 27 in FY2025 and 21 loans worth $69.9 million in FY2026. Over the full FY2017 to FY2026 span the state approved 368 hotel and motel loans for $989.3 million, ranking 10 of 53 among states for the class. Lodging is 4 of 39 among Washington's asset classes, and its location quotient of 1.17x shows a somewhat larger share of state SBA lending than hotels hold nationally. The falling count is the context for every number that follows.

Washington's hotel loans run large. The median is $2.6 million, or 1.19x the national median, and half the loans sit between $1.4 million and $4.1 million. Franchised properties make up 45.7% of loans, so independent hotels and motels are a large part of this book. SBA 7(a) carried 298 loans and SBA 504 carried 70. On the 7(a) side, Bank of Hope holds 51 loans for $154.6 million, Open Bank 32 for $87.3 million, Mountain Pacific Bank 26 for $73.9 million, PCB Bank 21 for $64.6 million and US Metro Bank 20 for $64.3 million. The 504 loans sit mostly with Evergreen Business Capital with 24 loans and $66.2 million, Ameritrust CDC with 19 and $63.8 million, and Northwest Business Development Association with 20 and $62.4 million.

No recorded losses, more cancellations

None of the 197 Washington hotel loans disbursed over FY2017 to FY2021 shows a charge-off: the floor reads 0.00% to date and at five years. Cancellation is the weaker number, at 14.1% of FY2017 to FY2024 approvals and 14.7% at the ceiling. For a borrower, that means a hotel approval here still has a real chance of falling apart before funding. For a lender, an independent property without a brand's reservation system needs its own demand evidence, since there is no franchise system to lean on.

Testing a Washington hotel project

King County leads with 50 loans, then Pierce with 43 and Snohomish with 39, but Grays Harbor with 26, Spokane with 21, Chelan with 20, Whatcom with 17 and Clallam with 14 show lending across many counties. A study must build demand by segment and season for the specific market, with the comp set's occupancy and rate and any new rooms planned. Cost has to come from bids for construction or for the renovation an acquisition needs. Coverage should be tested at a soft year's revenue per available room, and the study should document the comparables its appraisal relies on. One data caution: hotels and motels share a code, so a roadside motel and a resort are counted together.