Wert-Berater, Inc. is an independent hotel feasibility study consultant preparing lender- and agency-ready analyses for new hotels, motel developments, acquisitions, expansions, conversions, and repositionings. Our studies evaluate lodging demand by segment, competitive-set performance, achievable ADR, occupancy and RevPAR, pipeline supply, franchise and brand economics, stabilization, operating expenses, development costs, debt-service coverage, and downside sensitivity for SBA, USDA, conventional, and institutional financing.
Prepared for lenders, CDCs, and federal agencies to SBA SOP 50 10 8, USDA 7 CFR Part 5001, and conventional underwriting standards. Fiduciary duty runs to the lender and the agency, never the borrower. 3,969 studies since 1998 covering $41.2 billion in evaluated project value. So far in 2026: 41 engagements and $1.54 billion evaluated — 17 SBA, 11 USDA.
Hotel feasibility is penetration analysis against a named competitive set: the demand mix by segment — transient, corporate, group, leisure — the proposed property's fair share given brand, product, and location, and the ADR position the market will actually pay. The study tests RevPAR build-up against the set's performance, models the ramp to stabilization against the loan's interest carry, and addresses brand and franchise economics, PIP obligations on acquisitions, and the labor model behind the service level.
Methodology uses competitive-set occupancy and rate evidence, tourism and demand-generator data, highway counts for transient product, and operator benchmarks from RMA and industry sources. The model carries segmented demand, seasonal curves, and full operating statements tested against program coverage minimums under rate and occupancy stress.
Every Wert-Berater financial model is fully linked with no hardcoded values, so any reviewer can stress any input. Deliverables comprise a complete narrative report and the linked Excel model, with ten-year pro forma, sensitivity analysis at ±5, 10, and 15 percent, interest-rate stress from +0.5 to +3.0 percent, and ratio analysis benchmarked against RMA and IBISWorld data.
SBA engagements are prepared to SOP 50 10 8, including its debt-service-coverage minimums of 1.15x operating and 1.00x global. USDA engagements follow RD Staff Instruction 5001 across the Business & Industry, Community Facilities, REAP, and Value-Added Producer Grant programs. Conventional engagements are built to the lender's stated coverage standard, typically 1.20x. Hotel engagements arrive under SBA 504 and 7(a) for owner-operators — where SOP 50 10 8 treats hospitality as special-purpose property — USDA B&I for rural markets, and conventional lending for flagged product.
The firm's lodging record spans new-construction and acquisition engagements across select-service, extended-stay, upper-midscale all-suite, boutique and limited-service product, together with hotel components inside larger hospitality engagements such as the Temecula estate and a hospitality analysis in the Catskills. Recent SBA 504 lodging work includes a 120-key all-suite hotel in Montgomery County, Alabama, a 44-room select-service hotel in Seward, Alaska, and a 100-key franchised extended-stay property in Santa Fe, New Mexico; each is summarized under representative engagements below.
Independence is non-negotiable: determinations follow the evidence and are not revised under pressure, and studies are built to pass lender, agency, and third-party review without exception items. Where the analysis does not support the sponsor's projections, the study says so and states the conditions that would change the answer.
A hotel feasibility study consultant is not writing a market overview. The engagement produces a project-specific credit document answering whether this property, at this location, under this flag or independent brand, can generate enough net operating income to service the proposed debt at the coverage ratio the program requires. Every section ties back to that question, and the determination follows the evidence rather than the sponsor’s projections.
Lodging is broader in scope than most commercial asset classes because the property is simultaneously real estate and an operating business. Revenue depends on demand segmentation, rate positioning, and operational execution at the same time, so the analysis has to carry all three layers in one internally consistent model.
On the market side the analyst defines the primary lodging market and inventories the demand generators that actually produce room-nights — the employment and industrial base, medical centers, universities, government and military installations, tourism and recreation, airports, interstate interchange traffic, and convention or event activity. Demand is then separated into the segments that behave differently: corporate and commercial, leisure, transient, group, government, extended-stay, and contract or crew demand where the market genuinely supports it. Not every hotel draws on every segment, and a study that assumes otherwise inflates the demand pool.
The output is a determination, not a recommendation to lend. The study states whether the project is feasible, feasible subject to stated conditions, or not feasible on the evidence, and it names the conditions explicitly so the lender, CDC, and agency can each make their own credit and eligibility decisions.
These two products are frequently requested interchangeably, and they are not the same deliverable. Ordering the wrong one is a common cause of a delayed closing.
A hotel market study answers a demand question. It establishes the lodging demand in the trade area, identifies and benchmarks the competitive supply, estimates occupancy, ADR and RevPAR for the competitive set, accounts for the development pipeline, and recommends a positioning — product class, room count, brand tier — that the market can absorb. It stops at the market.
A hotel feasibility study contains the entire market study and then continues into the project’s economics. It adds the development budget, franchise and brand costs, departmental operating expenses, the staffing model, working capital and preopening requirements, net operating income, debt service against the proposed loan structure, debt-service coverage, ten-year projections, sensitivity and stress testing, and an explicit feasibility determination measured against the program standard.
Put simply: the market study asks whether the demand exists. The feasibility study asks whether the demand, converted to cash flow and measured against the proposed debt, actually supports the loan. Most SBA, USDA and conventional lodging credits require the second document. Where a sponsor is still choosing between sites or product classes, the market study is often the appropriate first step, and its work carries forward into the feasibility study without being repeated.
A feasibility study and an appraisal answer different questions and are not substitutes for one another, even though they often draw on overlapping market evidence.
The feasibility study asks an operating question: can the proposed hotel generate supportable demand and sufficient cash flow to operate and service the proposed debt? The appraisal asks a value question: what is the property worth? An appraisal of a going-concern lodging asset will typically allocate value among real property, personal property, and business enterprise value, and it is prepared under the appraisal standards applicable to that assignment.
A lender may require both, and on SBA lodging credits frequently does. The two documents can share competitive-set data, demand analysis, and rate evidence, but a favorable appraised value does not establish feasibility, and a feasibility determination does not establish market value. Where the same firm prepares both, they remain separate assignments with separate scopes and separate standards. The distinction is set out in more detail in the firm’s note on how a feasibility study differs from an appraisal, and going-concern lodging valuation is handled under special-purpose and going-concern appraisal.
The competitive set is the single most consequential judgment in a lodging study. Every penetration, ADR and occupancy conclusion is measured against it, so a set assembled carelessly produces a study that fails review regardless of how good the modelling is.
A defensible comp set is selected on what the subject actually competes with, not on a radius. The screening criteria are chain scale, service level, room count, brand affiliation, amenity package, rate positioning, the demand generators each property serves, and the traveler segments each property actually captures. Location matters, but proximity alone is a poor proxy: a limited-service interstate property two miles from a full-service convention hotel may share a postal code and compete for almost none of the same room-nights, while a comparable property fifteen miles away on the same interchange corridor may be the subject’s closest true competitor.
Where the evidence supports it, each set member is analysed for occupancy, ADR and RevPAR, seasonal behaviour, weekday versus weekend performance, group exposure, extended-stay exposure, recent renovation or rebranding activity, and franchise or brand strength. Weekday-weekend split matters because two properties can report similar annual occupancy while running completely different businesses — one on corporate midweek demand, the other on leisure weekend demand — and they respond very differently to a new entrant.
Competitive-set performance is developed from direct competitive research, state lodging-license and tax records, municipal and county records, brand and franchise directories, published rate and availability sampling across seasons and day-parts, demand-generator interviews, and site inspection. Where a client engagement provides licensed hotel-performance data, it is used and cited as such. The firm does not represent that it holds a subscription to any particular proprietary hotel-performance database, and no conclusion in a Wert-Berater study depends on data the report cannot source.
A proposed hotel’s occupancy should never be assumed to equal the market average. Penetration analysis is the discipline that replaces that assumption with arithmetic.
Fair share is the structural starting point. If the competitive set contains a given number of rooms and the subject adds its own room count, the subject’s fair share of available room-night demand is simply its share of total competitive rooms. A property representing one-tenth of the competitive rooms has a fair share of one-tenth of the demand. Fair share is a neutral baseline that assumes the subject performs exactly like the average of its set.
Penetration is what the study then has to justify: the extent to which the subject is expected to perform above or below that neutral share, and why. A new property with a current prototype, a strong national brand and reservation system, a superior location relative to the primary demand generators, and an amenity package the older set members lack may reasonably be projected to penetrate above fair share. A property entering with an unfamiliar independent flag, an inferior site, or a product class mismatched to the dominant demand segment may not reach fair share at all, and can remain below it permanently.
The analysis is run segment by segment, because a property can penetrate strongly in extended-stay demand and weakly in group demand within the same market. Room-night demand, competitive rooms, subject room count, product advantages and disadvantages, brand contribution, and location are each carried explicitly so a reviewer can see what is driving the projection.
There is no universal penetration index that makes a hotel financeable, and this firm does not publish one. An acceptable penetration level is entirely a function of the specific market, the set, the product, and the capital structure — and any consultant offering a fixed benchmark independent of those facts is describing a rule of thumb, not an analysis.
Hotel demand has to be built segment by segment, because each segment has a different rate, a different booking pattern, a different seasonality, and a different response to new supply. A single blended occupancy assumption conceals all of it.
Corporate and commercial demand originates with named sources: major employers, industrial and manufacturing facilities, medical centres, government offices, contract and project work, and crew demand where an identifiable project generates it. It is typically midweek, rate-negotiated, and relatively stable, and it is verified against employment data, employer disclosures, and direct enquiry rather than assumed from population.
Leisure demand follows tourism, recreation and attractions, and is usually weekend-weighted and strongly seasonal. Its analysis depends on visitation series, attraction attendance, park and recreation activity, and the travel calendar of the specific market. A market with severe seasonality can support a hotel on annual average occupancy while failing badly in shoulder and off-peak months, which is why seasonal curves are modelled rather than annualised.
Group demand comes from conventions and meetings, weddings and social events, sports tournaments, government and military group business, and tour activity. It requires appropriate meeting or banquet space to capture, books on long lead times, and is generally rate-discounted in exchange for volume. A property without the facilities to serve group business should not be projected to capture it.
Transient and highway demand is driven by traffic volume, interstate access and interchange configuration, visibility and signage, travel patterns, and stopover behaviour along the corridor. It is the dominant segment for highway-oriented limited-service and economy product and is analysed against state department of transportation traffic counts and the competitive capture at the interchange.
Extended-stay demand arises from temporary assignments, construction and project work, medical stays, relocation, and corporate contracts. It behaves differently from all of the above: longer average length of stay, weekly rate structures, lower housekeeping frequency and different labour economics, and it is far less rate-elastic on a nightly basis. The 120-key all-suite property analysed in the firm’s Montgomery County hotel feasibility study was structured specifically to serve conventional transient and extended-stay demand from one building.
No hotel depends on every segment, and the study says so explicitly. Identifying which two or three segments actually carry the property — and what happens if one of them weakens — is most of the analytical work.
Three measures govern lodging revenue, and they have to be understood separately before they are useful together.
ADR, average daily rate, is room revenue divided by rooms sold — the average rate actually achieved, net of discounting. Occupancy is the percentage of available rooms sold over a period. RevPAR, revenue per available room, is room revenue divided by rooms available, and it equals ADR multiplied by occupancy. RevPAR is the measure that matters to a lender because it captures both variables in one number and is computed over every room the property has to carry, sold or not.
The reason both inputs are analysed independently is that either one can be manipulated at the expense of the other. A hotel can drive occupancy to a very high level by discounting aggressively into online and opaque channels; occupancy looks excellent, ADR collapses, and RevPAR — and therefore net operating income — is weak, while variable costs of occupancy such as housekeeping, laundry, amenities and utilities rise with every additional room sold. The property is busy and unprofitable. Conversely a hotel can hold a high ADR by refusing to discount, run materially below its fair share of occupancy, and produce an equally inadequate RevPAR against a fixed cost base that does not shrink. Neither pattern is visible if only one measure is projected.
The forecast is therefore built from both directions and reconciled. The analysis carries weekday and weekend rate structures separately, seasonality by month, negotiated corporate rate levels and the volume attached to them, group rates and the displacement they cause, promotional and channel discounting with its distribution cost, the opening ramp before the property is established in the market, compression behaviour on high-demand nights when the set sells out and rate can be held, and the competitive pricing response the existing set is likely to make when a new property enters.
Rate positioning is stated relative to the named competitive set rather than in the abstract, and it has to be consistent with the product: a study cannot project a rate premium over the set while also projecting occupancy penetration above fair share unless the product genuinely justifies both. Where the two assumptions conflict, the model is corrected rather than the conclusion. In the firm’s Seward select-service hotel feasibility study, the sponsor’s unsupported rate and occupancy assumptions were replaced with analyst-developed figures throughout, which is a routine outcome rather than an exceptional one.
Supply analysis covers what exists today and what will exist during the subject’s ramp. The second half is the part most sponsor-prepared projections omit.
The existing inventory is established property by property: room counts, brands, chain scales, service levels, ages, recent renovation activity, and current positioning. To that the study adds hotels under construction, hotels with issued permits, publicly announced projects, properties that opened recently enough that their own ramp is still absorbing demand, properties undergoing major renovation or rebranding that will re-enter the market repositioned, and verified closures or conversions that remove rooms.
Rooms that open during the subject’s first three years matter as much as rooms standing today, and sometimes more. A project that pencils comfortably against current supply can fail if two competing properties are permitted on the same corridor and open in the subject’s second year — precisely when the subject is still ramping, carrying interest, and least able to defend rate. Where a credible pipeline exists, the study models its absorption effect on the subject’s penetration and rate rather than noting it as a qualitative risk.
Pipeline evidence is drawn from municipal and county planning and permit records, building-permit databases, state lodging-license applications, brand and franchise development announcements, and direct market research including enquiry with planning departments and local operators. Announced projects are not treated as certain supply: a proposal without financing, entitlement, or a franchise agreement is qualified as speculative and carried in a sensitivity case rather than the base case. Counting speculative rooms as certain understates feasibility just as ignoring permitted rooms overstates it, and the study distinguishes between the two on the record rather than by assumption.
A hotel does not open at stabilized performance. It opens into a market that does not yet know it exists, and the gap between opening and stabilization is where lodging credits most often fail.
The ramp is driven by preopening marketing and sales effort, the opening occupancy the property can realistically achieve, the pace at which market awareness builds, the reservation contribution a brand delivers from day one versus the distribution an independent must build itself, the time required to develop and convert negotiated corporate accounts, the long lead times on group business that mean the first year’s group calendar is largely set before the doors open, and the staffing ramp and service consistency that determine whether early guests return. Seasonality compounds all of it: a property opening at the start of its off-peak season faces a materially different first year than the same property opening into peak demand.
Against that revenue curve sits a cost structure that is largely fixed from day one, plus interest carry on the construction loan, preopening expense, and an operating deficit that has to be funded from somewhere. This is why working capital is a feasibility input rather than an accounting detail.
The distinction that matters to a credit officer is this: a hotel can be entirely viable at stabilization and still fail, if the loan structure cannot survive the ramp. A project showing strong stabilized coverage in year three but insufficient funded working capital and debt-service reserve to carry years one and two is not a feasible credit as structured, and the study says so and states the condition. The Seward engagement was determined feasible subject to stated conditions that included a funded two-year debt-service reserve for exactly this reason.
A flag is a revenue decision and a cost decision at the same time, and a feasibility study has to model both sides rather than assuming the brand pays for itself.
On the cost side, the analysis carries the initial franchise fee, the ongoing royalty, the brand marketing or advertising assessment, the reservation or central-booking fee, loyalty-program charges, technology and system fees, any required property-improvement plan, and the brand-standard FF&E and refresh obligations that recur over the franchise term. Modelled at contractual rates, these obligations commonly represent a substantial recurring share of room revenue, and they are deducted before coverage is calculated rather than treated as discretionary.
On the revenue side, a brand contributes a reservation channel, a loyalty base that delivers repeat and business-travel demand, corporate account access, and a rate position that an unknown independent may not achieve. That contribution is real and it is why franchised product frequently outperforms independents in transient and corporate-heavy markets. The study estimates it against the competitive set rather than accepting the franchisor’s projection.
Not every hotel needs a franchise. In destination leisure markets, historic properties, and markets where design and experience drive rate, a well-positioned independent or soft-branded property can outperform a mid-tier flag while avoiding the fee load entirely — provided the sponsor has a credible plan for distribution and marketing, which is the assumption that most often fails scrutiny. The test the study applies is whether the incremental revenue the brand delivers exceeds the total cost of carrying it, and that answer differs by market, by product class, and by sponsor.
An acquisition is not underwritten like a new build. The property has an operating history, and that history is evidence — which makes the analysis both better grounded and more demanding.
The starting point is the trailing performance: historical operating statements, trailing twelve-month occupancy, ADR and RevPAR, departmental expense behaviour, and the property’s actual penetration against its competitive set. The study establishes why the property performs as it does before projecting any change. A buyer’s case that assumes an immediate lift in rate and occupancy under new ownership, with no capital plan and no operational change to justify it, does not survive review.
Where the transaction involves a brand conversion or reflagging, the incoming franchisor will typically require a property-improvement plan. The PIP is carried as a hard capital cost with timing, not as a footnote: rooms taken out of order during renovation reduce available room-nights and revenue in the renovation period, the work itself may suppress rate and guest satisfaction while underway, and the capital has to be funded alongside the acquisition debt. A PIP that is deferred to preserve the pro forma is a condition, not a saving.
The study then projects post-renovation stabilized performance under the new flag and positioning, tests whether the lift actually justifies the combined acquisition and renovation basis, and measures coverage across the renovation period as well as at stabilization. Repositioning economics — changing service level, chain scale, or target segment — are analysed against the demand segments the market genuinely contains, because a property cannot reposition into demand that is not there.
Rooms-driven revenue with little or no food and beverage beyond a breakfast offering, leaner staffing, and a cost structure that is comparatively predictable. These properties depend on interstate, business and leisure transient demand, and their feasibility usually turns on interchange or corridor position, brand strength, and whether the rate the market supports covers a construction basis that has risen faster than achievable ADR in many secondary markets.
Longer average length of stay, weekly and monthly rate structures, in-room kitchen facilities, and materially different housekeeping and labour economics. Demand comes from corporate assignments, project and construction work, medical stays and relocation, and it is verified against identifiable sources rather than assumed. Lower operating cost per occupied room can support strong coverage where genuine extended-stay demand exists, and the segment is far weaker where it does not.
Rooms plus restaurants, bars, meeting and banquet space, and the labour required to run them. Each revenue department is modelled on its own economics, because food and beverage and banquet operations carry their own margins, staffing and risk, and a study that blends them into a single revenue line hides where the property actually makes or loses money. Group and meeting demand must be genuinely present in the market to support the facilities.
Positioning, design and experience drive rate rather than a franchise system. The trade-off is the absence of a brand reservation network and loyalty base, which places the full weight of distribution, digital presence, channel management and marketing on the operator. The feasibility question is whether the rate premium the concept commands genuinely exceeds the cost of building demand without a flag, and whether the sponsor has the operating capability to do it.
Transient capture from corridor traffic, where visibility, signage, interchange access and ease of entry are primary revenue drivers rather than amenities. Demand is analysed against traffic counts and stopover behaviour, and the segment is rate-sensitive: guests substitute readily between properties at the same interchange, so competitive pricing and condition matter more than brand tier in much of this product.
Demand analysis for a lodging engagement starts with the demand generators, not the supply side. The analyst identifies every category of traveler with a reason to stay in the trade area — corporate accounts, government contractors, medical facilities, university activity, event venues, highway interchange volumes — and estimates the room-nights each category produces before any supply is counted.
Supply analysis then maps the competitive set against that demand pool. Room counts, brand affiliations, product class, and estimated occupancy are assembled from state lodging-license registries, county assessor records, brand directories, and direct inspection. Pipeline supply — properties under construction or in permitting — is identified through municipal building-permit databases and state lodging-license applications, because unbuilt rooms that open during the ramp period directly compress the subject's penetration.
Traffic-count data from state departments of transportation informs demand estimates for highway-oriented limited-service and economy product, where the interchange capture rate is a primary revenue driver. Tourism board visitation data and convention-center booking calendars support leisure and group demand estimates. For properties near large employers, workforce-size data from state labor department filings and employer public disclosures provides an independent check on the corporate-demand assumption. All sources are cited in the report so a reviewing credit officer or agency examiner can verify the inputs independently.
A lodging model has more moving parts than a single-tenant commercial real estate model, but a small number of inputs account for most of the variance in the coverage ratio. Identifying those inputs and stress-testing each one is the analytical core of the engagement.
The financial section converts every market conclusion into cash flow and measures it against the proposed debt. It is the part of the study a credit committee reads first.
Room revenue is built from available rooms, projected occupancy and ADR by month, producing RevPAR across the seasonal curve rather than as an annual average. Other operating revenue — food and beverage, meeting and banquet space, parking, and other departmental income — is modelled only where the property actually has the facilities and demand to generate it. Destination or resort fees are included only where they are genuinely applicable to the product and market.
Operating expenses carry labour by department, utilities, franchise royalty and marketing, sales and marketing, management fee, repairs and maintenance, insurance, property taxes, and an FF&E reserve, with fixed and variable components separated so the model responds correctly when occupancy moves. Development costs carry land, hard costs, soft costs, FF&E, preopening, franchise fees, interest carry, working capital, and contingency, because the loan is sized against total project cost rather than construction alone.
From there the model produces net operating income, EBITDA where relevant to the structure, debt service on the proposed terms, and debt-service coverage measured against the standard the program requires. Coverage is reported by year across the ramp, not only at stabilization, and both operating and global coverage are shown where the program tests both. In the Montgomery County engagement, stabilized Year-3 operating DSCR of 1.365x cleared the SBA 1.15x minimum under a revised capital structure — a revision the study itself prompted mid-engagement.
Sensitivity testing then attacks the result deliberately: occupancy stress, ADR stress, combined stress on both, interest-rate movement, expense inflation, and pipeline risk from new supply entering during the ramp. Every Wert-Berater model is fully linked with no hardcoded values, so a reviewer can change any input and watch coverage move. A project that only clears its coverage requirement in the base case, and fails under a moderate and realistic downside, is reported as such.
Break-even occupancy is the occupancy level at which the property generates just enough revenue to cover everything it must pay. It is one of the most useful single figures in a lodging credit, because it converts the entire cost structure into a number that can be compared directly against the competitive set’s actual performance.
The calculation accumulates fixed costs that do not move with occupancy — property taxes, insurance, base labour, utilities baseline, management fee minimums, and debt service — together with the variable cost of each occupied room, franchise royalty and marketing assessments computed on revenue, reservation and loyalty charges, and the FF&E reserve. The model then solves for the occupancy at which contribution covers the total.
The point most often missed is that break-even occupancy is not a fixed property characteristic: it moves with ADR. A hotel achieving a higher average rate breaks even at a lower occupancy, because each occupied room contributes more. The same property forced to discount to fill rooms will find its break-even occupancy rising even as its occupancy rises — which is how a busy hotel misses its debt service. For that reason break-even is reported as a relationship across a range of rate outcomes rather than as a single figure, and it is compared against the competitive set’s demonstrated occupancy so a reviewer can see how much cushion actually exists.
There is no universal hotel break-even occupancy, and this firm does not publish one. It is a function of the specific cost structure, capital stack, rate position and market, and any figure quoted independently of those inputs is not analysis.
Each lending channel applies its own overlay to the feasibility requirement, and the distinctions matter for how the study is structured and what the coverage test must show.
Outdoor-hospitality assets are underwritten on the same coverage logic but with a different revenue structure, addressed separately in the firm’s RV park and campground feasibility studies.
Under SBA SOP 50 10 8, hotels and motels are classified as special-purpose properties, which means the agency applies heightened scrutiny to both the real estate collateral and the business income projection. The study must demonstrate 1.15x debt-service coverage on an operating basis and 1.00x on a global basis, and the narrative must address the special-purpose classification explicitly. SBA 7(a) and 504 are both used for owner-operator lodging acquisitions and new construction; the study structure is the same under either program.
USDA Business & Industry engagements for rural lodging properties follow 7 CFR Part 5001 and require the analyst to document that the market is underserved and that the project serves a public benefit consistent with rural development objectives. The feasibility standard under B&I is comparable to conventional underwriting but the narrative requirements around community impact are more extensive.
Conventional lenders typically require 1.20x coverage and place greater weight on the operator's track record and the brand's reservation contribution. A conventional engagement for a flagged property will include a more detailed analysis of the franchise system's RevPAR contribution relative to the competitive set, because the lender is effectively underwriting the brand's market position as part of the collateral story.
Recent lodging engagements, described only to the extent the published record supports. Each determination is the firm’s independent finding; credit and eligibility decisions rest with the lender, the certified development company, and the agency.
Adjacent lodging and hospitality work is handled under separate engagements with their own analytical structures:
The engagement begins with a fixed-fee quote, delivered within one business day of the initial inquiry. The fee is stated before any work begins and does not change based on the study's finding. No fee is contingent on a favorable determination, and the fiduciary duty in every engagement runs to the lender and reviewing agency, not to the borrower or project sponsor.
Work begins when the client delivers a complete data room. For a lodging engagement, the data room should include the site or property address, proposed brand or flag, room count and product class, any existing operating statements for acquisitions, the proposed loan structure, and any market studies or appraisals already in the file. Incomplete data rooms delay delivery; the firm will identify missing items before the clock starts.
Standard delivery is ten to fifteen business days from a complete data room. Rush delivery is available for time-sensitive SBA or USDA closings. The deliverable package includes the bound narrative report, the fully linked Excel model with no hardcoded values, ten-year pro forma, sensitivity and interest-rate stress tables, and an explicit statement of conditions.
Upon completion, the financial model is published to a secure client portal where it remains live. A credit officer, agency examiner, or underwriter can change any input — occupancy, ADR, expense ratio, interest rate — and the coverage ratios and pro forma recalculate in real time. No static PDF can replicate that function during a credit committee review.
Hotel and motel engagements are prepared under the responsibility of Donald Safranek, MSc, principal of Wert-Berater, Inc. The firm has completed 3,969 feasibility studies since 1998 covering $41.2 billion in evaluated project value, and maintains MAI and ASA valuation designations in house.
The firm is an independent feasibility and valuation practice. It is not a hotel operator, franchisor, broker or lender, holds no franchise approval or brand affiliation, and receives no compensation contingent on a financing outcome. Fiduciary duty in every engagement runs to the lender and the reviewing agency. Where an engagement raises questions of law, architecture, engineering, or liquor licensing, those matters are treated as underwriting constraints and referred to the appropriate licensed professional rather than opined on.
This page was last reviewed on 2 September 2026.
A hotel feasibility study consultant independently tests whether a proposed or existing hotel can generate enough supportable demand and cash flow to operate and service the proposed debt. The work covers lodging demand by segment, a named competitive set, achievable ADR and occupancy, market penetration, the development pipeline, franchise and operating costs, development budget, ten-year projections, debt-service coverage and downside sensitivity. The consultant is not an advocate for the project: the deliverable is a determination measured against the lender’s or agency’s standard, with any conditions stated explicitly.
A complete lodging study includes economic and market analysis, demand-generator and demand-segment build-up, a named competitive set with occupancy and ADR benchmarking, existing supply and the development pipeline, subject positioning with fair share and penetration, ADR, occupancy and RevPAR projections across a seasonal curve, a departmental operating statement, franchise and brand cost schedules, the development budget including FF&E, preopening and working capital, a ten-year pro forma, debt-service coverage by year, break-even occupancy, sensitivity and interest-rate stress testing, and an explicit feasibility determination with conditions.
Demand is built from the demand generators, not from population or a market average. The analyst inventories every category of traveler with a reason to stay in the trade area — major employers, industrial and medical facilities, universities, government and military installations, tourism and attractions, event venues, airports and interstate traffic — and estimates the room-nights each produces. Demand is then separated into segments that behave differently: corporate, leisure, group, transient, government, extended-stay and contract. Each carries its own rate, seasonality and booking pattern, and only the segments the property can genuinely capture are counted.
A competitive set is chosen on what the subject actually competes with, not on a radius. Screening criteria are chain scale, service level, room count, brand affiliation, amenity package, rate positioning, the demand generators each property serves and the segments each actually captures. Proximity alone is a poor proxy — a limited-service highway property and a full-service convention hotel can sit two miles apart and compete for almost no shared room-nights. Set members are then benchmarked on occupancy, ADR, RevPAR, seasonality, weekday-weekend split, and recent renovation or rebranding activity.
They are forecast separately and then reconciled, because either can be manipulated at the other’s expense. Occupancy is projected from segment demand, fair share and justified penetration against the competitive set. ADR is projected from the set’s demonstrated rates and the subject’s product position, carrying weekday and weekend structures, seasonality, negotiated corporate rates, group rates and displacement, promotional and channel discounting, and compression nights when the set sells out. The two must be mutually consistent: a study cannot project both a rate premium and above-fair-share occupancy unless the product genuinely justifies both.
RevPAR — revenue per available room — is room revenue divided by rooms available, and equals ADR multiplied by occupancy. It is projected by carrying the occupancy and ADR forecasts month by month across the seasonal curve and through the opening ramp, rather than multiplying two annual averages. RevPAR is the measure lenders focus on because it captures both variables against every room the property must carry, sold or not. A hotel can post strong occupancy through heavy discounting and still produce weak RevPAR, which is precisely the pattern a single blended assumption conceals.
Fair share is the neutral baseline: the subject’s share of total competitive rooms is its share of available room-night demand, so a property representing one-tenth of the set’s rooms has a one-tenth fair share. Penetration is the extent to which the subject is projected to perform above or below that baseline, and it has to be justified — by product age and quality, brand and reservation contribution, location relative to demand generators, and amenity advantages the set lacks. The analysis is run segment by segment. There is no universal penetration index that makes a hotel financeable.
Supply analysis covers what exists and what will exist during the subject’s ramp. The study adds hotels under construction, permitted projects, publicly announced developments, recently opened properties still absorbing demand, properties in renovation or rebranding that will re-enter repositioned, and verified closures or conversions. Rooms opening in the subject’s first three years can matter more than rooms standing today, because they arrive while the subject is still ramping and carrying interest. Speculative projects without financing, entitlement or a franchise agreement are qualified and carried in a sensitivity case rather than the base case.
There is no single answer, and any consultant quoting a fixed stabilization period independent of the market is describing a rule of thumb. The ramp depends on preopening sales effort, brand reservation contribution versus independent distribution build-out, the time required to convert negotiated corporate accounts, group booking lead times that largely set the first year before opening, staffing and service consistency, and seasonality — a property opening into its off-peak season faces a materially different first year than one opening into peak demand. The study models the specific ramp and tests whether the loan structure survives it.
Break-even occupancy is the occupancy at which the property generates just enough revenue to cover fixed costs, variable costs of occupancy, franchise and reservation charges computed on revenue, FF&E reserve and debt service. It is useful because it converts the whole cost structure into one figure comparable against the competitive set’s demonstrated occupancy. Critically, it is not fixed: it moves with ADR. A hotel achieving a higher rate breaks even at lower occupancy, while one discounting to fill rooms can watch break-even rise even as occupancy rises. No universal break-even percentage exists.
A market study answers the demand question: what lodging demand exists, what the competitive supply is, what occupancy and ADR the set achieves, what is in the pipeline, and what product the market can absorb. A feasibility study contains all of that and then continues into the project’s economics — development budget, franchise costs, operating expenses, working capital, net operating income, debt service against the proposed structure, coverage ratios, sensitivity testing and an explicit determination. Most SBA, USDA and conventional lodging credits require the feasibility study; the market study is often the right first step when a sponsor is still choosing between sites.
They answer different questions. A feasibility study asks whether the hotel can generate supportable demand and cash flow sufficient to operate and service the proposed debt. An appraisal asks what the property is worth, and for a going-concern lodging asset typically allocates value among real property, personal property and business enterprise value under the appraisal standards applicable to that assignment. A lender may require both, and on SBA lodging credits frequently does. A favorable appraised value does not establish feasibility, and a feasibility determination does not establish market value.
Franchise economics are modeled at contractual rates on both sides. Costs carried include the initial franchise fee, ongoing royalty, brand marketing or advertising assessment, reservation and central-booking fees, loyalty-program charges, technology and system fees, and the brand-standard FF&E and refresh obligations recurring over the term. These are deducted before coverage is calculated rather than treated as discretionary. Against that, the study estimates the brand’s revenue contribution — reservation channel, loyalty base, corporate account access and rate position — benchmarked against the competitive set rather than accepted from the franchisor’s projection.
Yes, where a brand conversion or reflagging triggers one. The property-improvement plan is carried as a hard capital cost with timing, not a footnote: rooms taken out of order during renovation reduce available room-nights and revenue, the work can suppress rate and guest satisfaction while underway, and the capital must be funded alongside the acquisition debt. The study projects post-renovation stabilized performance under the new flag, tests whether the lift justifies the combined acquisition and renovation basis, and measures coverage across the renovation period as well as at stabilization.
A hotel is simultaneously real estate and an operating business. Revenue depends on demand segmentation, rate positioning, and daily operational execution, not a lease. Occupancy and ADR move independently, the ramp to stabilization can take years, and franchise fees, labor ratios, and FF&E reserves all compress NOI before the coverage ratio is calculated. Each of those variables must be tested separately and in combination.
The fee is fixed and quoted within one business day of your inquiry. It does not change based on the study's conclusion, and no portion is contingent on a favorable finding. The exact amount depends on project complexity, loan program, and whether rush delivery is required. Contact the firm with the property address, room count, brand or flag, and loan program to receive a quote.
Standard delivery is ten to fifteen business days from receipt of a complete data room. Rush delivery is available for time-sensitive SBA or USDA closings. The clock starts when all required project information is in hand; the firm will identify any missing items before work begins so there are no mid-engagement delays.
At minimum: the property address or site location, proposed or existing brand and flag, room count and product class, proposed loan amount and structure, and — for acquisitions — at least two years of operating statements. Any existing appraisal, market study, or franchise disclosure document already in the file should be included. The firm will identify additional items needed before the engagement clock starts.
Yes. SBA SOP 50 10 8 classifies hotels and motels as special-purpose properties, which triggers heightened collateral scrutiny and requires the feasibility study to address that classification explicitly. Coverage minimums are 1.15x operating and 1.00x global. The study must support both tests with a demand-driven revenue build-up, not a simple income-and-expense projection.
The underlying market and financial analysis is substantially the same, but the narrative requirements differ. USDA B&I engagements under 7 CFR Part 5001 require documentation of rural public benefit and community impact that SBA does not. A study prepared for one program can typically be adapted for the other, but the firm will confirm the scope before quoting.
Conventional lodging lenders typically require debt-service coverage around 1.20x, though the standard is the lender’s own and is confirmed at engagement rather than assumed. Beyond coverage, they weight the operator’s track record and the brand’s reservation contribution heavily, because they are effectively underwriting the operating business and the flag’s market position as part of the collateral story. A conventional engagement for a flagged property therefore includes a more detailed analysis of the franchise system’s RevPAR contribution relative to the competitive set, alongside the ramp, working capital adequacy and downside sensitivity.
Qualify a project. Tell us about the project and the program. We will tell you the truth about it — scope, timeline, and fee confirmed before work begins.
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