Hotel stabilisation finance for the ramp to stabilised trade

Who can borrow and what lenders look for

Stabilisation lenders are lending against trade that is forming rather than fixed, so they underwrite the operator and the plan as much as the property. They want a credible occupancy and RevPAR ramp supported by demand evidence for the market, an operator with a track record of taking hotels to stabilised trade, a marketing and distribution plan, and where relevant a franchise or brand affiliation that brings a booking system and a recognised covenant. They look hard at the gap between current trade and projected stabilised trade, and at the time the hotel needs to close it. PwC forecasts modest RevPAR growth into 2026, around 1.8 percent in London and 1.5 percent regionally, so the case rests on the operator's execution rather than on the market doing the work. They will also test the day-one position: how much of the projected occupancy is already booked or evidenced through forward bookings and corporate accounts, what the hotel is achieving on ADR against the wider market today, and how the operator's existing hotels have performed through a comparable ramp. A franchise affiliation strengthens the case because it brings a central reservation system, a loyalty programme and a recognised brand that fills rooms faster than an independent launching cold. We present the ramp credibly, with sensible sensitivities and a downside case, so the lender can see the hotel reaching the EBITDARM that refinances the facility even if the ramp runs slower than planned.

How much you can borrow

Stabilisation finance is sized on where the hotel is heading, not only where it is today, so the achievable loan keys off the projected stabilised EBITDARM and the interest cover that profit will deliver. Lenders typically lend up to around 65 to 70 percent of the going-concern value, but the practical limit during the ramp is the hotel's ability to service the facility, which is why interest is often part-rolled until trade catches up. The stronger the demand evidence and the operator's record, the more confidence a lender takes in the projection and the more it will advance. Location anchors the numbers: regional UK RevPAR sat at around 98 pounds on 82.8 percent occupancy and London at around 233 pounds in Q3 2025, per Knight Frank and HotStats, so a hotel ramping in a strong market supports more debt than one in a thin catchment. The interest plan is part of the sizing, not an afterthought: by rolling part of the interest during the early months, when occupancy is lowest, and stepping up to full service as RevPAR climbs, the lender matches the debt service to the cash the hotel actually generates, which lets it advance more than a fully serviced facility would allow. We model the ramp, the interest plan and the refinance loan together, so you know what the facility carries you to and what the eventual term loan looks like once the hotel stabilises.

Rates and costs

Stabilisation finance is priced above a settled term mortgage because the trade is still building, indicatively from around 8 to 11 percent, quoted as a fixed rate or a margin over base or SONIA, with interest often part-serviced and part-rolled through the ramp. Expect a lender arrangement fee of around 1 to 2 percent, a going-concern valuation that assesses both current and stabilised trade, legal fees for both sides, and on larger facilities a periodic trading review while the ramp runs. Because the facility is meant to be temporary, the total cost is driven by how long the hotel takes to stabilise, so a faster ramp onto a cheaper term loan saves real money. Rolled interest also compounds, adding to the balance that the eventual term loan has to refinance, which is another reason the ramp should be as short as the trade allows. The premium over a term mortgage is the price of borrowing against trade that is not yet proven, and it falls away the moment the hotel reaches stabilised EBITDARM and qualifies for permanent debt. We disclose our broker fee in writing, quote the cost to the stabilised refinance, and never claim an exclusive tie to any lender.

Stabilisation finance, bridging or a term loan

Stabilisation finance is the right product when a hotel is open and trading but has not yet reached the settled occupancy and RevPAR a term lender wants to see. It differs from bridging, which is shorter and purely security-and-exit led, and from a term loan, which is sized on proven, stabilised trade. A new opening or a post-refurbishment hotel often runs in sequence: a bridge or development facility builds or buys it, stabilisation finance carries it through the ramp, then a term loan refinances it once the trade settles. If the hotel already trades at a stabilised level, you do not need a stabilisation facility, you need a term mortgage. We position the hotel on that path and arrange the facility that fits where it actually is.