“Hotel & Leisure Finance industry is a very lucrative industry both for the investors and businesses. These include Hotels, Resorts, Apartments Hotels, B&B, Pubs, Night Clubs & Restaurants etc.
What makes Esteema Hotel & Leisure Finance ‘DIFFERENT?
Hotel & Leisure Finance is a complex financing expertise, especially when it needs bespoke structuring and where the traditional method of financing does not work.
Our expertise in ‘Hotel financing, Corporate & legal structuring’ support any financing structure for the special need. We have helped numerous complex matters, where traditional finance cannot be competing with.’
Esteema Hotel Finance | Traditional Financing | |
|---|---|---|
| ✓ Any Purpose Finance | Purchase, New Built, Investment M&A, Restructure etc | No |
| ✓ Any Type Finance | Short Term, Medium-term ,Long-Term Loan | No |
| ✓ Any type of Hospitality | Yes | No |
| ✓ Any Borrower (UK & International) | Yes | No |
| ✓ ANY SPV (UK or Offshore) | Yes | No |
| ✓ Any Location (UK or Globally) | Yes | No |
| ✓ Multi-Currency & Cross Border Funding | Yes | No |
| ✓ Loan Size | No Upper Limit | Very Restricted |
| ✓ Leverage | Up to 70% | Very Restricted |
| ✓ Interest Rate | from 1.75% + | From 4%+ onward |
Key Factors Affecting Hotel & Leisure Finance?
Borrower Profile
✓ Personal & Business profile
✓ A & L & Income profile
✓ Past Experience & Track Record
✓ SPV Structure & Location
Collateral Profile
✓ Hotel Types
✓ Location & Demand
✓ Operating Team
✓ Lease rental terms
.
Financial Appraisal
✓ Past Operating accounts / or rental income
✓ Projected Accounts for new built / expansion or restructuring
✓ Operator /Covenant Financial Strength
✓ Lease terms/break clause
Hotel & Leisure Finance Guide
NEW HOTEL DEVELOPMENT GUIDE
⦁ Global Hotel Capital Markets Specialist (DEBT • EQUITY • JV • INVESTMENTS )
⦁ Global Hotal Transaction Specialist ( Acquisition & Sales)
Email: esteema@esteemacapital.com | Phone +44 (0) 2084646430
NEW HOTEL DEVELOPMENT GUIDE
1. Understand the Hotel Development Lifecycle
A hotel development typically goes through these 8 stages:
1. Site Identification – Location, planning status, access, demand drivers.
2. Market & Feasibility Study – Competitor supply, occupancy, ADR, RevPAR.
3. Financial Feasibility – Development cost, funding mix, IRR, ROI.
4. Concept & Design – Room mix, brand standard, layout.
5. Planning Permission – Council approvals.
6. Financing – Senior debt, mezzanine, equity, JV.
7. Construction & Fit-Out – Contractor, timeline, FF&E.
8. Pre-Opening & Operations – Staff, systems, marketing, soft opening.
2. Key Hotel Asset Types
• Budget / Limited Service — Ibis, Holiday Inn Express
• Midscale — Hampton, Courtyard
• Upscale — Hilton, Marriott
• Luxury — Ritz-Carlton, St. Regis
• Extended Stay / Aparthotel — Adagio, Staybridge
• Resort — Beach, mountain, golf
• Boutique / Lifestyle — Hoxton, Moxy
3. Financial Metrics Developers Must Know
3.1 Operational KPIs:
• Occupancy (%)
• ADR
• RevPAR
• TRevPAR
• GOP / GOPPAR
• NOI / EBITDA
3.2 Investment Metrics:
• Total Development Cost (TDC)
• Cost per Key
• Yield on Cost
• IRR (Unlevered & Levered)
• Equity Multiple
• DSCR
4. Development Cost Structure
Typical UK & Europe hotel development cost split:
• Land — 10–25%
• Construction — 45–55%
• FF&E + OS&E — 8–12%
• Professional Fees — 7–10%
• Finance Cost — 6–12%
• Contingency — 3–6%
• Pre-opening Cost — 1–2%
5. Funding Options for New Hotel Development
Esteema Capital Partner can help you with the low-cost capital and capital structuring advisory
⦁ Senior Debt
⦁ Mezzanine Debt
⦁ Equity / JV Partner
⦁ Forward Funding / Forward Purchase
⦁ Bridge Loan – Land Acquisition
Please contact us for a discrete discussion & support.
6. Brand vs Independent
Branded Hotel (Franchise/Management)
Pros: Higher occupancy, strong distribution, easier financing.
Cons: Brand fees 8–12%, strict design rules.
Independent Hotel
Pros: Full flexibility, lower fees.
Cons: Needs strong marketing.
7. Key Documents Required (Developer Checklist)
A. Site & Legal: Title deeds, site plan, planning history.
B. Technical: Architect designs, MEP, cost plan, programme.
C. Financial: Feasibility, 10-year P&L, development appraisal.
D. Operator / Brand: LOI, HMA/Franchise docs.
E. Market Study: Competitor set, STR data.
8. Risk Factors & Mitigations
• Planning Risk – early council meetings
• Construction Risk – fixed-price contract
• Cost Overrun – QS monitoring
• Market Risk – sensitivity analysis
• Funding Risk – early term sheet
• Operator Risk – strong brand
9. Exit Strategies
• Stabilisation & Refinance
• Sale to institutional buyer
• Forward sale
• Hold as income asset
10. Summary
Esteema Capital Partners’ guide offers a straightforward approach to developing new hotels, covering every stage from land acquisition to eventual exit. Our comprehensive expertise spans the entire process: from providing capital advisory for new developments, through stabilization, and ultimately to exit.
**Contact Us
For expert assistance with Global Hotel Capital Market Solutions & Hotel Transactions , please contact:
Esteema Capital Partners
Email: ambrish@esteemacapital.com
Office: +44 (0) 208 464 6430
Mobile: +44 (0) 7740 646 777
Website: www.esteemacapital.com
