A surge in financing is helping the hotel industry reach new heights, according to a recent study.

The study-jointly sponsored by HMBA: America's Hotel Broker and Lodging Hospitality magazine-found that banks of all sizes are rushing to finance hotels, an industry shunned by lenders since the early 1990s.

The study surveyed 25 lenders and found:

All said they would make loans for hotel acquisition.

95% said they would refinance hotels.

85% were willing to finance renovation.

60% said they would underwrite new construction loans.

"Financing for hotel acquisition, construction, renovation, and refinancing is more readily available today than at any point in nearly 10 years," said Sharon Ralls Lemon, author of the study.

The pickup in financing, the study said, is expected to help lift the hotel industry's profits to $14.5 billion this year from $7.5 billion in 1995.

Ms. Lemon said that occupancy rates are at their highest level this decade, and delinquency rates on hospitality loans are at a historical low of 3%, off from 15% four years ago.

"Hotels are a very good industry for lending," said Michael Higgins, head of the real estate group at CIBC Wood Gundy Securities.

He said that economic conditions in Manhattan are particularly suited to fostering growth.

"It is very important to feel comfortable with the operator," Mr. Higgins added.

The typical loan-to-value of the financings varied by the types of lenders who responded. Money-center banks said they financed projects at up to 75% of property value, while community and regional banks lent at 65% to 80% of value. Meanwhile, life insurance companies posted loan-to-value ratios of 70% to 75%.

But how diligent are banks at reviewing credits and sidestepping the disasters of the 1980s?

Respondents said they've been giving their hotel loans more scrutiny over the past 10 to 15 years.

Nearly half said they require feasibility studies before approving a loan; 30% seek agreements for distributions at the time of the sale; and 20% seek interest rate kickers above certain thresholds.

Almost three-quarters of the lenders said they take into account a trailing 12-month income statement; half of the lenders take into account the previous year's statement; and 20% of the lenders require accounting projections for the next 12 months.

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