{"id":1944166,"date":"2023-06-05T08:06:02","date_gmt":"2023-06-05T12:06:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-hotel-developers-run-out-of-cash-as-construction-lending-dries-up\/"},"modified":"2023-06-05T08:08:49","modified_gmt":"2023-06-05T12:08:49","slug":"analysis-us-hotel-developers-run-out-of-cash-as-construction-lending-dries-up","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-hotel-developers-run-out-of-cash-as-construction-lending-dries-up\/","title":{"rendered":"US hotel developers face cash shortage due to lack of construction loans."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-us-hotel-developers-run-out-of-cash-as-construction-lending-dries-up%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1944166&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>Regional Bank Lending Standards Slow U.S. Hotel Development<\/h2>\n<p>By Bianca Flowers and Priyamvada C<\/p>\n<blockquote>\n<p>Tighter lending standards from regional banks are making it harder for U.S. hotel developers to secure funding, slowing construction of new hotels at a time Americans\u2019 appetite for travel is ripe.<\/p>\n<\/blockquote>\n<div id=\"div-gpt-ad-1663871513696-art-1\" style=\"min-width: 320px; min-height: 50px;  text-align: center;\">\n\t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-1'); });  \t<\/script>\n<\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<p>Hotel developers, private equity firms, and general contractors are feeling the financial stress on regional banks, the largest lenders to hotels and other commercial real estate markets. This has forced developers to postpone projects or find other creative ways to raise capital, according to Reuters.<\/p>\n<p>The hotel industry\u2019s predicament highlights the impact on the broader U.S. economy of the regional banking crisis, which resulted in the failure of three mid-sized U.S. lenders and prompted a flight in deposits to larger banks.<\/p>\n<blockquote>\n<p>\u201cThe regional banks that used to be active for us 9 to 12 months ago are not showing up to finance hotels for us today,\u201d said MCR Hotels Chief Investment Officer Joseph Delli Santi, the third-largest U.S. owner-operator of hotel brands including Hilton.<\/p>\n<\/blockquote>\n<p>Since March, 59 of the 98 total U.S. hotel projects that broke ground or were in the pre-construction phase this year have been paused, according to previously unreported data shared with Reuters by Build Central Inc., a subscription-based research and analytics firm used by some large hotel brands to gauge market opportunities by location.<\/p>\n<h3>Impact on the Broader Economy<\/h3>\n<p>Chief executives of major hotel companies, Hilton Worldwide Holdings Inc and Marriott International, have also alluded to the issue \u2013 warning of a reduction in hotel developments as credit becomes more expensive and less available, in their latest earnings calls. Analysts say slower hotel development will also limit profits of blue-chip manufacturers like Caterpillar Inc., whose commercial real estate customers account for around 75% of construction sales. Customers are scaling back on equipment purchases, deterred by high interest rates to finance or lease machinery.<\/p>\n<h3>Smaller Hoteliers Hit Roadblocks<\/h3>\n<p>As lending criteria grew more stringent, smaller hoteliers without existing lending relationships began to hit roadblocks, said Andy Ingraham, a hotel developer and president of the National Association of Black Hotel Owners, Operators, and Developers.<\/p>\n<p>Ingraham said he and other members are struggling to get financing for various projects. In some cases, private equity firms have stepped in to fill in funding gaps for construction loans, but at steeper costs, said Evens Charles, chief executive of Frontier Development and Hospitality Group, a Washington D.C. developer whose portfolio includes 10 hotels.<\/p>\n<blockquote>\n<p>\u201cI\u2019m hearing 9-10% (interest rates) and it\u2019s coming from a 4% environment two-and-a-half years ago,\u201d he said.<\/p>\n<\/blockquote>\n<h3>Offloading Commercial Real Estate Loans<\/h3>\n<p>Small to mid-size banks, including lenders with less than $250 billion in assets, hold roughly $2.3 trillion in <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/big-u-s-banks-see-loan-growth-slowing-as-outlook-for-demand-economy-darkens\/\" title=\"Big U.S. banks see loan growth slowing as outlook for demand, economy darkens\">commercial real estate loans<\/a> for structures like offices, hotels, and warehouses, the equivalent of 80% of their total liabilities. Overexposed regional banks are now <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-hotel-developers-run-out-of-cash-as-construction-lending-dries-up\/\" title=\"US hotel developers face cash shortage due to lack of construction loans.\">offloading commercial real estate loans<\/a> at a discount. Troubled regional lender PacWest Bancorp announced in May it would sell $2.6 billion worth of <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/pacwest-bancorps-plan-to-sell-2-6-billion-real-estate-loans-calms-investors\/\" title=\"PacWest Bancorp\u2019s plan to sell .6 billion real estate loans calms investors\">real estate construction loans<\/a>.<\/p>\n<p>Banks started to reduce their hotel loan portfolios in the first quarter of 2023, an analysis by S&#038;P Global Market Intelligence found. Based on available data from regulatory filings, the study showed 14 of 24 banks that held more than $125 million in outstanding hotel and motel loans reported quarter-over-quarter decreases. Western Alliance was the anomaly. The Arizona-based bank boosted its hotel loan holdings in the first quarter by 14% from the previous quarter. Western Alliance did not respond to request for comment.<\/p>\n<h3>Conclusion<\/h3>\n<p>Elevated interest rates and inflated raw material costs due to supply chain backlogs were already hurting hotel developers even before the regional banking crisis. The situation has made it harder for developers to secure funding, slowing construction of new hotels at a time when Americans\u2019 appetite for travel is ripe. <\/p>\n<p>\u201cIt\u2019s getting harder to pencil in a good hotel deal,\u201d said Mitchell Hochberg, president of Lightstone Group, a New York-based private real estate investor and developer with a $3 billion portfolio of hotel properties. \u201cA lot of developers would prefer to sit on the sidelines until rates come down rather than be burdened with the excess costs.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>banks is hindering funding for U.S. hotel developers, causing a slowdown in new hotel construction despite high demand for travel. Private equity firms, general contractors, and hotel developers have all reported difficulties in securing funding due to tighter lending standards.<\/p>\n","protected":false},"author":66,"featured_media":1944167,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[4119,5919,16760,4295,7557,5974,5562],"class_list":["post-1944166","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann","tag-cash","tag-construction","tag-developers","tag-hotel","tag-lack","tag-loans","tag-shortage"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1944166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1944166"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1944166\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1944167"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1944166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1944166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1944166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}