Hotel acquisition finance and mortgages
The commercial mortgage that funds the purchase of a trading hotel, sized on the business the hotel generates rather than the bricks alone. We arrange and place the debt with the lenders that understand the sector.
What is hotel acquisition finance?
Hotel acquisition finance is the commercial mortgage used to buy a trading hotel as a going concern. It is the long-term term loan that sits behind the purchase, secured by a first charge over the property and supported by the trade the hotel produces. It is sometimes called a hotel mortgage, and it is finance to acquire a hotel as a business, not lending against an empty building.
Lenders look at the hotel as an operating asset. They test occupancy, the average daily rate, or ADR, and the revenue per available room, or RevPAR, alongside the brand or franchise covenant, then size the loan against the trading profit the hotel generates. The valuation is carried out on a going-concern basis, reflecting the hotel as a functioning business rather than vacant property, so a well-trading hotel supports more debt than its bricks-and-mortar value alone would suggest.
We place these mortgages across the specialist hotel and leisure lenders and challenger banks that back the sector, names such as OakNorth, Shawbrook, Allica Bank and Assetz Capital, alongside the clearing banks and debt funds. Whether you are an experienced operator adding to an estate, a first-time buyer with a manager in place, or an investor buying a hotel let to a brand, we match the deal to the lender most likely to support it.
Hotel acquisition finance is the head of a family of products. Where a term lender cannot move fast enough, bridging completes the purchase and refinances onto a term mortgage afterwards. Where the asset needs work or is still finding its trade, refurbishment finance or stabilisation finance carries it to a point where a term mortgage fits. We map the route across all of them so the acquisition is funded at the right price.
- Commercial mortgage to buy a trading hotel as a going concern
- Sized on EBITDARM trading profit, not just property value
- Going-concern valuation reflecting the hotel as a business
- Occupancy, ADR, RevPAR and the brand covenant all tested
- Open to experienced operators, first-time buyers and investors
- Placed with OakNorth, Shawbrook, Allica Bank and the wider market
Indicative terms
- Loan sizeFrom around 500,000 pounds, no fixed ceiling on strong covenants
- Loan to valueUp to 65 to 70 percent of going-concern value
- Term15 to 25 years
- RateIndicatively from around 7 to 10 percent, or a margin over base or SONIA
- RepaymentCapital and interest, or interest-only on the right profile
- Interest coverTested on EBITDARM trading profit
- Key testsOccupancy, ADR, RevPAR, brand or franchise covenant
- SecurityFirst legal charge over the hotel, debenture on the operating company
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
Who it suits
- Experienced operators buying a single hotel or adding to an estate
- First-time buyers entering the sector with an experienced manager in place
- Hotel groups acquiring trading assets to grow a region
- Investors buying a freehold let to a brand or operator on a lease
- Buyers of a hotel from administration or a distressed sale with a turnaround plan
Discuss hotel acquisition finance
A view on fundability within one working day.
How we arrange your acquisition finance
Review and terms
We review the hotel, the trading accounts, the brand or franchise position and your experience, then approach the lenders whose criteria fit and agree indicative heads of terms.
Decision in principle
We secure a decision in principle setting the loan, the rate and the conditions, so you can bid or exchange with confidence.
Valuation and due diligence
The lender instructs a going-concern valuation and works through legal and commercial due diligence, including the trade and the operating company.
Offer and completion
The formal offer is issued, the legal work completes and funds are drawn to complete the acquisition.
Who can borrow and what lenders look for
Lenders advance to operators and investors buying a hotel as a trading business. They expect a credible operator covenant, which for a first-time buyer usually means an experienced general manager and a clear business plan, and for an established operator means a track record across existing hotels. The trade matters most: lenders examine occupancy, ADR and RevPAR, the seasonality of the market, the dependence on any single demand source, and the brand or franchise the hotel trades under. A hotel on a strong franchise agreement carries a recognised covenant that supports the credit decision, while an independent stands on its own trading record. For an investment purchase let to a brand or operator, the focus shifts to the lease, the rent cover and the tenant covenant. We package the case to put your strengths in front of the right lender and explain any weaknesses before they become a problem.
How much you can borrow
On an acquisition, most lenders advance up to 65 to 70 percent of the going-concern value, and the binding constraint is usually interest cover rather than loan to value. Lenders size the loan so that EBITDARM, the earnings before interest, tax, depreciation, amortisation, rent and management charges, covers the debt service with headroom. A hotel running high occupancy with a healthy ADR supports more debt than a hotel with the same property value but weaker trade. Location drives the achievable figure: Knight Frank and HotStats data for Q3 2025 put London RevPAR at around 233 pounds on 87.5 percent occupancy and a 266 pound ADR, against regional UK RevPAR of around 98 pounds on 82.8 percent occupancy. Average going-concern prices reflect that gap, at around 315,000 pounds a room in London and 129,000 pounds a room regionally, per Knight Frank for 2025. We model the achievable loan from the accounts before we approach lenders, so the figure we quote is grounded in the hotel's actual trade.
Rates and costs
Hotel commercial mortgage rates are indicatively from around 7 to 10 percent, quoted either as a fixed rate or as a margin over the Bank of England base rate or SONIA, with the exact rate set by the operator covenant, the strength of the trade, the loan to value and the term. Expect a lender arrangement fee, usually around 1 to 2 percent of the loan, a valuation fee for the going-concern report, and legal costs for both sides. A monitoring or trading review may apply on larger or weaker covenants. Our broker fee is disclosed in writing up front and we never claim an exclusive tie to any lender. We compare the total cost of the deal across the market, because the lowest headline rate is not always the cheapest facility once fees and terms are counted.
Acquisition finance, bridging or a term loan
Acquisition finance is the right product when you are buying a trading hotel you intend to hold and run, or let, for the long term, and you have the time a term lender needs. If you need to move faster, for an auction or a competitive purchase, hotel bridging finance completes quickly and is refinanced onto a term loan once the hotel settles. If the hotel is newly opened or repositioned and not yet at stabilised trade, stabilisation finance carries it through the ramp before a term mortgage fits. Many buyers use these in sequence: bridge to buy, stabilise or refurbish, then refinance onto a long-term commercial mortgage. We map the route so you are not paying short-term money for longer than you need to.
Hotel acquisition finance: common questions
Can you finance a hotel?
Yes. A trading hotel is financed with a commercial mortgage sized on its going-concern value and its EBITDARM trading profit, not on the building alone. Specialist hotel lenders and challenger banks lend to operators and investors across the UK, and we place the debt with the lender whose criteria best fit the deal.
How much can I borrow to buy a hotel?
Most lenders advance up to 65 to 70 percent of the going-concern value, with the loan sized so EBITDARM covers the debt service comfortably. A strong franchise covenant and high occupancy can stretch the figure, while weaker or seasonal trade tightens it. We model the achievable loan from the accounts before approaching lenders.
How many years is a typical hotel loan?
A hotel term mortgage typically runs 15 to 25 years, on either a capital-and-interest or, for the right profile, an interest-only basis. Short-term bridging facilities used to complete an acquisition quickly run 1 to 24 months and are refinanced onto a term loan afterwards.
What is the 15 5 rule for hotels?
The 15 5 rule is an investor rule of thumb suggesting a hotel should achieve around a 15 percent return on the equity invested and run at no more than around a 5 percent expense overrun, as a quick sense check on a deal. Lenders do not underwrite to it; they size debt on EBITDARM and interest cover. We focus on the trading numbers that drive what a lender will actually advance.
How long does hotel acquisition finance take to arrange?
A term commercial mortgage typically takes around eight to twelve weeks from application to completion, driven mostly by the going-concern valuation and legal due diligence. If you need to move faster, we can arrange bridging finance to complete quickly and refinance onto the term mortgage afterwards.
Discuss hotel acquisition finance
Send us your scheme and we will come back with a view on fundability and likely terms within one working day.