Real estate investment banker RobertDouglas’ 10th Annual Lender Survey, just released, found that with inflation persisting and recessionary anxieties lingering—even as interest rates plateau—lenders in the hotel sector maintain engagement but have tightened underwriting standards to mitigate economic vulnerability.

As a result, cash flow metrics and location/quality of the real estate are the top two most important “gating” issues.  Debt funds, while providing crucial liquidity to struggling assets, are scrutinizing a broader spectrum of metrics to assess creditworthiness, as economic slow-down and financing risk are viewed as the biggest threats to hotel loan portfolios.

However, 95% of lenders expect no significant distress within their existing portfolio.