Financing Climate Spurs Hotel Growth

from the San Diego Business Journal (July 8, 2013)

…Robert Rauch, president of San Diego-based hospitality consulting firm R.A. Rauch & Associates Inc., said the local region is in the early stages of what could be a three-year run in new hotel development.  That’s largely because interest rates remain historically low, even amid rampant talk that they could rise in the coming year as the economy improves. In the current climate, Rauch said, developers and lenders realize that the cost of building a local hotel in a prime location is often lower than buying an existing property.  Financing prospects in recent months have improved significantly from where things stood during and just after the Great Recession, when funding for hotel construction dried up. Well-capitalized hotel developers are now finding lenders willing to move beyond long-popular investment sectors like multifamily housing. “The hotel financing climate is excellent right now,” Rauch said. “I would compare it almost to where it was in the 2004-05 period.”…

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