The State of Hotels in America

Our view: preparation should come before an asking-price decision. We would rather see a reconciled operating statement, a documented capital plan, and early lender feedback than an ambitious valuation supported by projected savings.

For sellers, identify which earnings improvements are already visible in the books and which remain proposals. Keep those categories separate. Document owner involvement, management costs, replacement needs, and any unresolved brand requirements.

For buyers, we recommend evaluating the acquisition as a complete capital commitment: purchase price, closing costs, working capital, immediate repairs, and any renovation or brand obligations. Test that commitment against property-specific financing terms rather than the illustrative rates in this draft.

Our recommendation for both sides is straightforward: agree on the evidence before arguing over the conclusion. A clear record does not guarantee agreement on price, but we consider it the right foundation for a serious negotiation.

DVP Capital Group — Dieter von Puschendorf, California Licensed Real Estate Salesperson, DRE# 01971402, and Carmen von Puschendorf. Matching prepared hotel sellers with qualified hotel buyers nationwide, with a focus on small-to-medium hospitality transactions.

Start with a property-specific financing request

We recommend approaching lenders with the operating statements, ownership structure, proposed purchase terms, management plan, and capital budget assembled in one package. Ask each lender to identify what it needs before issuing an indication and which assumptions remain subject to underwriting. Do not treat the borrowing-rate range in this draft as evidence that financing is available.

The Federal Reserve's Senior Loan Officer Opinion Survey gathers information about changes in bank lending standards and terms and demand for loans. (Source )

In our view, that survey is useful background for a financing discussion, not a substitute for a property-specific proposal. Request written treatment of the interest rate, amortization, maturity, fees, reserves, guarantees, and prepayment provisions. Compare the proposals using the same operating assumptions and capital plan.

Test the complete debt structure

We would build separate cases for the proposed financing, a higher borrowing cost, and weaker operating results. Keep the purchase price unchanged initially so the effect of each assumption is visible. Then decide which adjustment you would make: more equity, a lower price, a smaller capital program, or no transaction.

Ask the lender to show its own NOI calculation and debt-sizing method. Reconcile its treatment of management expense, replacement reserves, owner labor, and proposed improvements with your model. We recommend resolving those differences before relying on a loan amount in negotiations.

For floating-rate debt, request the index, spread, floor, reset schedule, and any hedging requirement in writing. For every proposal, ask what happens at maturity and what conditions must be met to extend. Our preference is to evaluate the full obligation rather than selecting a lender from the initial coupon alone.

Turn the PIP into a defined capital commitment

For a branded property, we recommend requesting the current property improvement plan, any proposed transfer requirements, the applicable deadlines, and written clarification of unresolved scope. Treat preliminary conversations as open questions until the appropriate party confirms the requirement.

Obtain itemized contractor and vendor estimates where possible. Separate the purchase budget from renovation costs, working capital, contingency, and any allowance you choose for operating disruption. We would also ask who approves substitutions, what must be completed before reopening or rebranding, and which obligations remain with the seller.

Coordinate the decision calendar

Before agreeing to a closing schedule, map lender underwriting, inspections, brand review, cost estimating, and legal diligence onto one calendar. Assign a responsible party and decision date to every unresolved item.

Our judgment is that buyers should preserve a clear opportunity to reconsider the economics when material financing or capital assumptions change. Sellers should request timely evidence of financing progress without treating an early indication as a final commitment. We recommend resolving the largest uncertainties first, then negotiating price against the same documented plan.