Collapse of US Banks Could Make Hotel Financing Harder to Find
Other Financing Players Will Come to the Table as Banks Pull Back
The fall of Silicon Valley Bank and Signature Bank, the largest U.S. banking collapse since the Great Recession, will ultimately lead to a shift in funding sources, difficulty obtaining hotel construction loans and a slowdown in recovery of the already challenging lending environment, say hotel analysts and owners.
It's been a tumultuous week for banks in the U.S. and Europe, with the shutdowns of Silicon Valley Bank and Signature Bank, and rescues for Switzerland's Credit Suisse and First Republic Bank in San Francisco, leading to banking stock slides, recoveries and further slides, eroding confidence among investors.
What Does This Mean for Hoteliers?
But what does it mean for the hotel sector? That's to be determined based on what part of the industry you're in, say analysts.
Many publicly traded hotel real estate investment trusts have outsized hotel ownership exposure in the greater San Francisco area. San Francisco was already severely challenged prior to SVB's collapse, and recent events won't help the recovery of that market, said C. Patrick Scholes, managing director of lodging and leisure equity research for Truist Securities, in an email interview.
