When Bankers Trust New York Corp. led the syndication for a $120 million senior secured credit facility for Bristol Hotels in 1995, just after the company went public, only eight banks showed up to the bank meeting.

But a year later when Bankers Trust led a $560 million loan to finance Bristol's acquisition of Holiday Inns, 45 hungry banks lined up to get a piece of the pie.

"This is evidence of the renewed interest in the industry," said Jacques E. Brand, managing director at BT Securities. "The hotel industry has had very strong performance over the last few years; the fundamentals are strong and lenders are better understanding the risk-reward dynamic."

Wells Fargo & Co. and Banc One Corp. are co-agents on the deal. Bankers Trust is also leading a $70 million bond offering, and Merrill Lynch & Co. is leading a $2.6 million equity offering.

The success of the loan underscores a fundamental shift in the real estate market that has bankers-burned by the industry just a few years ago- beating down the doors of real estate brokers.

Other real estate lenders called the deal huge and said that two years ago a deal of this size could not have succeeded.

"A $560 million loan is the right kind of scale now," said Bjorn Hanson, a partner for Coopers & Lybrand LLP. "This is in keeping with what Bristol has achieved and is consistent with what's been done at other (hotel) companies. They have shown the ability to spend the money wisely and use it for growth."

Mr. Hanson added that Bristol's financing has been "one of the great success stories in the lodging industry."

"Bristol is exceeding everyone's expectations," he said. "This is a good way for Bankers Trust to maintain the banking relationship and bring in other banks to debt and equity transactions."

Mr. Brand of Bankers Trust said senior secured bank facilities for hotels are now structured on trailing cash flows rather than loan-to-value ratios. In the 1980s, banks got into trouble lending on over-inflated values where the underlying cash flows were just fair.

Another change is the proliferation of hotel C-corporations, which allow for the "leakage" of cash flows into management fees. Now that more hotels are becoming a part of corporations, owners can avoid the "leakage" of management fees-which can be up to 5% of the gross receipts-to third-party managers, so that lenders can generate more substantial overall cash flows than in the 1980s.

"All of the intrinsics of the industry are moving north," said Bob Eaton, vice president of Colliers International Hotel Realty, San Francisco. "Occupancy rates have been improving against the background of small supply coming into the market."

The last hotel cycle was nine years long, and the previous high-water market was in 1987, Mr. Eaton said. Now property values are near 1987's level again, he said.

Another difference this time is that real estate borrowers don't have the S&L industry fueling new development. "More prudent lending is being done more conservatively, with lower loan to value ratios," Mr. Eaton said.

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