The hotel financing environment is shaping up to be a "tale of two cities" for borrowers this year.
Speaking on the latest episode of the CoStar News Hotels podcast, Jared Schlosser, head of originations and C-PACE at Peachtree Group, said 2026 will be a good year for well-positioned borrowers.
"I think for well-thought-out acquisition, business plan deals, for solid cash flow, for performing deals, for strong borrowers who continue to do what they say they're going to do, there's ton of liquidity," he said, noting that "on the flip side of that, you're seeing a lot of deals that are struggling."
While there has been a lot of talk about the trajectory of interest rates and how they might affect hotel investments, Schlosser said that's the wrong way to approach the current market.
"When I send out a term sheet, the No. 1 thing that's negotiated these days is the rate floor because so many people have heard rates are going to get cut," he said. "People ignore things that are way more important than a rate floor, and they go straight to a rate floor. That just leads me to believe there's a lot of conversation out there that rates are just magically going to drop 100 or 200 basis points.
"Maybe they do," he continued. "I have no way to predict the future, but we've been saying this for the last few years, and they're relatively around the same rate as they've been since the large increase of [2022]."
One of the long-term shifts the hotel financing market has seen is an increase in private credit and a decrease in banks' willingness to lend. Schlosser said he expects this will remain the case in the medium to long term, which is more expensive for borrowers but safer for banks.
"I think that lending to an institution at a lower attachment point is a better business for a bank and they can capture deposits and treasury management and everything that comes along with that, which is the overall goal of making a real estate loan anyway," he said.
For the rest of the interview with Peachtree's Jared Schlosser, listen to the podcast above.