Branded and franchise hotel finance
We arrange commercial finance for operators, buyers and investors acquiring, refinancing or developing branded and franchise hotels. This is business lending against a trading hotel, not a personal mortgage.
Funding branded hotel
Branded and franchise hotels operate under an agreement with a major brand, Hilton, Marriott, IHG, Accor and others, either as a franchise where the owner runs the hotel under the flag, or under a management agreement where the brand operates it. The flag brings distribution, loyalty demand and a recognised standard, and for a lender it brings a covenant story that is quick to read.
When we say franchise hotel finance we mean the acquisition loan, term facility, development finance or refinance used to fund the branded hotel as a trading business. Lenders read it through the going-concern EBITDARM, the brand and franchise covenant, and the obligations the agreement imposes, especially the property improvement plan, or PIP, that brands require to keep the asset to standard.
The franchise agreement is central to the credit case. Lenders look at the length of the term, the fees, the brand's right of approval over a sale or refinance, and the capital commitment of any PIP, because those obligations sit ahead of debt service in practice. A strong flag with a long agreement supports keener leverage; a lapsing agreement or a heavy looming PIP gives a lender pause.
We present the agreement, the brand covenant and the trade so hospitality-experienced lenders can price the risk, and we run the whole market as an arranger, factoring the brand's consent requirements into how we structure the deal.
What we fund
- Hotels run under a franchise agreement with a major brand
- Hotels under a brand management agreement
- Acquisitions of branded hotels with an assignable agreement
- Re-flagging or conversion to a new brand
- New-build branded hotels with a signed franchise agreement
- Branded hotels funding a property improvement plan
Indicative terms
- Acquisition or term LTVUp to around 65 to 70% of value
- Going-concern basisSized on maintainable EBITDARM
- Brand covenantFranchise or management agreement central to terms
- PIP fundingCapital provision for brand-required works
- Term15 to 25 years, from around 7 to 10% per annum
- DevelopmentAround 60 to 65% of cost on signed-flag schemes
- Key testsBrand covenant, agreement term, PIP, trade, deposit
Indicative only. Terms vary by lender, operator and home and are not an offer of finance.
How we fund branded and franchise hotels
We fund branded hotels on their going-concern trade and the strength of the flag behind them. For an acquisition or term refinance we model the maintainable EBITDARM, weigh the franchise or management agreement, and arrange a commercial mortgage or term loan to around 65 to 70% of value over 15 to 25 years at an indicative 7 to 10% per annum. A strong covenant from a major brand can support keener leverage, because the distribution and loyalty demand stabilise the trade. We size the deposit and the facility with the property improvement plan in mind, ring-fencing capital for brand-required works that would otherwise sit ahead of debt service. For new-build branded schemes with a signed franchise agreement we arrange development finance to around 60 to 65% of cost. Because brands hold approval rights over a sale or refinance, we structure with the agreement and the brand's consent in view. Every figure is indicative and never an offer.
Lender appetite for branded and franchise hotels
Branded and franchise hotels attract broad and competitive appetite, because a recognised flag gives lenders a covenant story they understand quickly. High-street and challenger banks lend on stabilised branded assets with a sound agreement, specialist hospitality lenders fund acquisitions and re-flagging on going-concern EBITDARM, and development funders back new-build schemes that carry a signed franchise agreement. Lenders favour a long agreement term with a strong brand such as Hilton, Marriott, IHG or Accor, set against the scale of operators such as IHG with around 199 UK hotels and Marriott with around 135, and they price in the property improvement plan obligations. As an arranger and introducer with no exclusive tie, we match the brand, the agreement and the PIP profile to the lender most comfortable with the covenant, and we work within the brand's approval requirements.
The branded hotel market and exit
Branded hotels trade on covenant strength and liquidity. The wider market is deep: UK hotel investment reached £3.01bn year to date in 2025 per Savills, after a record £6.6bn in 2024 per Christie & Co, with regional price per room at around £129,000 and London at around £315,000 per Knight Frank. Knight Frank and HotStats put regional RevPAR at around £98 on 82.8% occupancy and London at around £233 on 87.5% occupancy in Q3 2025, the room demand that a recognised flag captures through its distribution and loyalty programme. A branded hotel with a long agreement and a strong flag is a liquid asset with a ready buyer pool, though a purchaser must satisfy the brand and take on the agreement and any PIP, which lenders factor into the exit. We structure with that handover in view.
Finance that suits this setting
- Hotel acquisition financeThe core route for buying a branded hotel with an assignable franchise agreement.
- Hotel term loansLong-term debt against a stabilised branded hotel and its brand covenant.
- Hotel refurbishment financeFunds the property improvement plan a brand requires to keep the flag.
- Hotel development financeFunds new-build branded schemes that carry a signed franchise agreement.
- Hotel refinanceRe-prices debt or releases equity, working within the brand's approval rights.
Fund a branded hotel home
A view on fundability within one working day.
What drives a branded hotel's numbers
A branded hotel's economics combine the going-concern trade with the cost and benefit of the flag. The brand brings distribution, loyalty demand and a recognised standard that stabilise occupancy, set against franchise fees and the capital commitment of the property improvement plan, or PIP, that the brand requires to keep the asset to standard. Knight Frank and HotStats put regional RevPAR at around £98 on 82.8% occupancy and London at around £233 on 87.5% occupancy in Q3 2025, the room demand a recognised flag captures through its booking and loyalty channels. The decisive factors for a lender are the remaining term of the franchise or management agreement, the fee load, and the scale of any looming PIP, because those obligations effectively sit ahead of debt service. We model the EBITDARM after fees and ring-fence the PIP capital, because that is the realistic picture a lender funds.
Indicative branded hotel leverage and rates
Indicatively we arrange branded acquisition or term lending to around 65 to 70% of value, over 15 to 25 years, at around 7 to 10% per annum, sized on the going-concern EBITDARM. A long agreement with a strong brand such as Hilton, Marriott, IHG or Accor, set against the scale of operators such as IHG with around 199 UK hotels and Marriott with around 135, can support keener leverage because the covenant stabilises the trade. We size the deposit and facility with the property improvement plan in mind, ring-fencing capital for brand-required works. New-build branded schemes with a signed franchise agreement run to around 60 to 65% of cost. These are market-typical, indicative figures and never an offer; because brands hold approval rights over a sale or refinance, the terms depend on the agreement, the PIP and the brand's consent, and we structure with that in view.
Frequently asked questions
Can you get financing for a hotel franchise?
Yes. Lenders are generally comfortable funding a branded or franchise hotel because the flag brings distribution, loyalty demand and a covenant story they read quickly. We arrange acquisition, term and development finance to around 65 to 70% of value on the going-concern trade, factoring in the franchise agreement term and any property improvement plan. We present every figure as indicative, not an offer.
How does a hotel franchise agreement work in finance terms?
Under a franchise agreement the owner runs the hotel under the brand's flag and standards, paying fees in return for distribution and loyalty demand; under a management agreement the brand operates the hotel. Lenders read the agreement closely, weighing its term, fees, the brand's approval rights over a sale or refinance, and the property improvement plan obligations, because those commitments effectively sit ahead of debt service.
What is a PIP and how does it affect financing?
A property improvement plan, or PIP, is the schedule of works a brand requires to bring or keep a hotel to its standard, often triggered on acquisition or re-flagging. Because the capital commitment sits ahead of debt service in practice, lenders size the deposit and facility with the PIP in mind, and we ring-fence capital for it so the deal holds together.
Does a strong brand help me borrow more?
Often, yes. A recognised flag with a long agreement stabilises the trade through distribution and loyalty demand, which can support keener leverage and pricing than an unbranded independent of the same size. The strength and remaining term of the agreement, and the scale of any PIP, drive how far that benefit runs.
Can I refinance a branded hotel or sell it on?
Yes, but the brand's approval rights matter. A purchaser or new lender usually needs to satisfy the brand and take on the franchise or management agreement and any PIP, so we structure a refinance or sale with the brand's consent in view from the outset to keep the timetable realistic.
Funding a branded hotel home?
Tell us about the home and the operator and we will come back with a view on fundability and likely terms.