What loan-to-value (LTV) might be available on a commercial mortgage for a hotel?

Quick answer: Expect typical LTVs for UK hotel commercial mortgages to fall roughly between 40% and 75%. Branded, high‑performing city hotels commonly attract 60–70% LTV (select lenders may go to ~75% in strong markets); mid‑market hotels typically 55–65%; seasonal, underperforming or higher‑risk hotels often receive 40–55%; development or conversion projects are usually lower and staged. Short‑term bridging lenders can sometimes stretch LTV but at materially higher cost. Exact LTV depends on valuation method, trading performance (e.g., RevPAR/ADR), operator strength and the lender type.

Get a Free Eligibility Check / Get Quote Now — free, no obligation. We match you to lenders and brokers who specialise in hotels (minimum loan amounts usually from £10,000 upwards).

Why loan‑to‑value matters for hotel finance

Loan‑to‑value (LTV) = (loan amount ÷ property value) × 100. It’s a core metric lenders use to size risk on commercial mortgages. For hotels, LTV affects:

• Interest rate and fees — higher LTVs usually mean higher rates or stricter terms.
• Equity requirement — lower LTV means more cash or equity needed from the buyer or sponsor.
• Covenants and security — lenders may insist on stronger covenants, personal or corporate guarantees, or cross‑security at higher LTVs.
• Refinance flexibility — lower LTV provides headroom if trading weakens.

Put simply: higher LTV increases lender exposure to valuation falls and trading shocks; so hospitality lenders are often conservative after periods of market stress.

Typical LTV ranges for hotel commercial mortgages (UK)

Below are practical LTV bands lenders commonly consider. These are indicative ranges — individual outcomes vary by lender, asset and borrower.

• Full‑service city / branded hotels: 60%–70% LTV. In very strong markets or with a strong operator/sponsor, specialist lenders may push to ~75%.
• Mid‑market / limited‑service hotels: 55%–65% LTV, reflecting typically lower average rates and RevPAR than branded city assets.
• Resort / seasonal / underperforming hotels: 40%–55% LTV because revenue volatility increases perceived risk.
• Development, conversion or substantial refurbishment: usually ≤50% LTV on long‑term finance; many projects are financed via staged development finance (measured by loan‑to‑cost rather than LTV).
• Short‑term bridging or opportunistic purchases: up to ~70–75% LTV for experienced sponsors on short terms — at a premium cost and often with tighter exit requirements.

Why the spread? Hotels are both property and operating businesses. Lenders assess physical collateral and trading forecasts; both influence LTV.

What lenders look at when deciding hotel LTV

Here’s what typically moves an LTV up — or down. Each factor is considered together by underwriters.

Location & market

City centre, transport links and catchment demand matter. Strong London or gateway city locations attract higher LTVs than rural or isolated sites.

Hotel type & operational model

Branded, franchise or management‑contract hotels with predictable income typically command higher LTVs than small independent or heavily F&B‑dependent hotels.

Historic & forecasted performance (RevPAR, ADR, occupancy)

RevPAR (revenue per available room) and ADR (average daily rate) trends show trading health. Lenders stress‑test forecasts to see how much income can fall before DSCR (debt service coverage ratio) breaches occur.

Borrower and operator track record

Experienced sponsors and established operators reduce perceived execution risk and can increase a lender’s willingness to lend at higher LTV.

Valuation method & stress testing

Lenders prefer conservative valuation approaches (comparable sales, DCF with stress scenarios). If valuations rely on optimistic future trading, LTV will be reduced.

Capital expenditure & deferred maintenance

Known major capex lowers the acceptable LTV unless funded separately (capex escrow or retained proceeds).

Existing debt, covenants & security package

Lower-ranking or existing encumbrances reduce the senior lender’s recovery prospects and therefore reduce LTV offers.

Regulatory, planning and environmental constraints

Licensing, listed status, flood risk or planning limitations can all negatively affect LTV.

Macro risks and lending liquidity

Higher interest rates, tighter capital markets or sector shocks (e.g., travel disruption) make lenders more conservative and reduce LTV appetite.

How different lender types treat hotel LTV

• High‑street banks: Conservative: often 50–65% LTV on hotels, with detailed covenants and operator requirements; best for long‑term financing at competitive margins.
• Specialist commercial mortgage lenders: More flexible: commonly 60–70% LTV for strong assets and sponsors.
• Specialist hospitality/debt funds & private lenders: Can stretch to 70–75% LTV (or higher on bridging) but charge higher rates and fees and prefer experienced sponsors.
• Development finance lenders: Focus on loan‑to‑cost (LTC) and staged advances; overall LTV on completed value is often lower until practical completion is achieved.
• Brokers & packagers: They can present cases to the right market segment to improve achievable LTV by highlighting operator contracts, historical trading and sponsor strength.

Example scenarios (illustrative)

Case A — Branded city hotel (London, 150 rooms)

• Valuation £30m, proven RevPAR recovery, experienced operator: lender offers 70% LTV (£21m) from a specialist commercial lender.
• Rationale: strong location, brand contract, predictable cashflows and sponsor experience.

Case B — Coastal boutique conversion (45 rooms)

• Purchase price £3m, significant refurbishment required. Lender offers 50% LTV with capex escrow and phased drawdowns.
• Rationale: seasonal demand, conversion risk and capex justify conservative LTV and staged lending.

Case C — Distressed purchase using bridging

• Investor buys underperforming hotel at discount; short‑term bridging lender offers 75% LTV for 6 months at higher rate to allow repositioning. Refinance later at 60% with a long‑term lender.
• Rationale: bridging lenders accept higher LTV for short periods where clear exit or refurbishment plan exists.

Practical tips — how to improve the LTV you can access

• Present accurate, stress‑tested forecasts (show downside scenarios and mitigations).
• Engage an experienced operator or secure a management/brand contract to reduce operational risk.
• Treat valuation drivers: small capex that materially increases income can lift valuation (if affordable).
• Reduce existing encumbrances or restructure prior debt to improve senior security.
• Consider mezzanine or subordinate layers to increase overall financing but understand higher cost and complexity.
• Use a specialist broker to package evidence, operator covenants and sponsor track record to appeal to the right lenders.

How UK Business Loans can help

UK Business Loans does not lend — we connect you to lenders and brokers who specialise in hotel finance. Complete a quick, 2‑minute enquiry and we’ll match your hotel or hospitality business with the lenders most likely to offer the LTV and terms you need.

Get Quote Now — Free Eligibility Check

We typically ask for: loan amount, property postcode, company details and a short description of the hotel. This helps our partners respond with the right market options quickly. Important: our service is free and no obligation — submitting an enquiry does not affect your credit score.

For sector‑specific resources and detailed lender matches see our hotels business loans page.

Important: UK Business Loans is an introducer and does not lend money or provide regulated financial advice. We match your enquiry with approved brokers and lenders. Submitting a form does not affect your credit score. Always review lender terms carefully.

Compliance, transparency and what to expect

When you submit an enquiry we will only share the information you provide with selected finance partners who can help with hotel commercial mortgages. Those partners may contact you to request further documents (valuations, management accounts, tenancy/brand agreements, business plans). A fully underwritten offer usually requires a professional valuation, operator contract review and up to several weeks for due diligence.

Frequently asked questions

What is LTV and how is it calculated for hotels?

LTV (loan‑to‑value) = loan amount ÷ property value. Example: a £6m loan on a £10m hotel equals 60% LTV. Lenders may apply haircuts to valuations or use stressed DCF valuations when calculating acceptable LTV.

Can I get 75–80% LTV for a hotel purchase in the UK?

75% LTV is possible in limited circumstances—typically short‑term bridging for experienced sponsors or very strong branded assets with low operational risk. 80%+ is rare for long‑term commercial mortgage lending and would usually be expensive or require significant additional security.

Does hotel performance (RevPAR) affect LTV?

Yes — RevPAR and occupancy trends are central. Lenders stress test forecasts; weak or volatile trading reduces the LTV they are willing to provide.

Will I need personal guarantees for higher LTVs?

Often, yes. Lenders may require personal or corporate guarantees, or additional security, especially where the borrower or sponsor has limited track record.

How long does it take to get an LTV decision?

Initial eligibility can be given in hours; a credit‑approved LTV and formal offer usually take days to weeks depending on valuation, legal checks and the lender’s workload.

What paperwork do lenders need to confirm LTV?

Common documents: up‑to‑date valuation or desktop valuation, historic management accounts, trading forecasts, operator/management contracts, details of existing debt, and evidence of sponsor experience or track record.

Ready to check what LTV you could get?

Complete our quick enquiry and we’ll match you to lenders and brokers experienced in hotel finance. It takes two minutes, is free and no obligation. Get Started — Free Eligibility Check

Questions or prefer to talk? Contact us at +44 20 0000 0000 or contact us online. Our team will explain the process and what evidence you’ll need to get the best possible LTV outcome.

1. What loan‑to‑value (LTV) can I expect for a hotel commercial mortgage in the UK?
Typical LTVs for UK hotel commercial mortgages range roughly from 40%–75% depending on asset type — branded city hotels often 60–70% (up to ~75% with specialist lenders), mid‑market 55–65% and seasonal or underperforming hotels 40–55%.

2. How does hotel trading performance (RevPAR/ADR/occupancy) affect the LTV lenders will offer?
Lenders heavily weight RevPAR, ADR and occupancy trends when sizing LTV, reducing available LTV for weak or volatile trading and increasing it for stable, recovering performance.

3. Can I get higher LTV using bridging or private specialist lenders for a hotel purchase?
Yes — short‑term bridging and private hospitality lenders can sometimes stretch to ~70–75% LTV (or higher in rare cases) but at materially higher rates, fees and with tighter exit conditions.

4. How quickly will UK Business Loans match me to lenders and give an initial LTV indication?
UK Business Loans typically matches enquiries within hours and can provide an initial eligibility/LTV indication quickly, while a fully underwritten LTV and formal offer usually take days to several weeks after valuation and due diligence.

5. Does submitting an enquiry with UK Business Loans cost anything or affect my credit score?
No — submitting the free, no‑obligation enquiry is not an application, does not affect your credit score, and is used only to match you with appropriate lenders and brokers.

6. What paperwork do lenders usually require to confirm LTV for hotel finance?
Lenders generally ask for a recent valuation or desktop valuation, historic management accounts, trading forecasts, operator/brand contracts, details of existing debt and evidence of sponsor/operator experience.

7. Will I need personal guarantees or extra security to obtain a higher LTV on a hotel loan?
Often, yes — higher LTVs frequently require personal or corporate guarantees, additional security or subordinated financing depending on borrower strength and lender appetite.

8. What loan amounts can I apply for through UK Business Loans for hotels and hospitality?
Our partner network can arrange hotel loans from around £10,000 up to £10m+ depending on the lender and the size and type of the hotel transaction.

9. How can I improve the LTV I can access for my hotel acquisition or refinance?
You can improve achievable LTV by securing an experienced operator or brand contract, presenting stress‑tested forecasts, funding or escrow for capex, reducing existing encumbrances, or using a specialist broker to package your case.

10. Which types of lenders should I consider for hotel business loans — high‑street banks, specialist lenders or debt funds?
High‑street banks offer conservative, long‑term commercial mortgages (typically lower LTV), specialist commercial or hospitality lenders offer more flexible LTV and terms, and private debt/bridging funds can provide higher short‑term LTV at a higher cost.