Hotels Business Loans — Typical Fees for Hotel Financing (Arrangement, Valuation, Legal & Broker)

Summary: Hotel financing typically involves several fee types: arrangement fees (commonly 0.5%–3% of the facility), valuations and specialist surveys (£250 to £5,000+ depending on scope), legal fees (buyer and lender solicitors), and broker/introducer charges (commission or success fees). These costs vary by loan size, lender risk appetite, property type and whether fees are paid up front or capitalised. Ready to compare options? Start a Free Eligibility Check to get matched with hotel finance specialists and receive quoted costs tailored to your deal.

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What affects the fees you’ll pay on hotel financing?

Several interlinked factors determine the fees you are quoted. Understanding these drivers helps you budget and negotiate confidently.

Loan size, LTV and security

• Higher loan-to-value (LTV) and smaller loan sizes often attract higher percentage fees because the lender’s fixed costs are proportionally higher.
• Large facilities (£500k–£5m+) may secure lower percentage arrangement fees but larger absolute fees.

Borrower credit & risk profile

Poorer credit history, limited trading track record or precarious cash flow can increase fees or require additional security and covenants.

Property type, location and trading performance

Operational hotels (with trading accounts) require specialist valuations and underwriting; seasonal hotels or those in weaker markets can attract higher risk pricing and fees.

Arrangement fees — what they are and what to expect

Arrangement fees (also called facility or underwriting fees) are charged by lenders to set up the loan. They cover the lender’s administrative and credit risk costs and are typically expressed as a percentage of the facility.

Typical ranges (percent and examples)

• Typical range: 0.5% – 3% of the loan amount.
• Illustrative examples:
  • On a £500,000 loan: 0.8% = £4,000; 2% = £10,000.
  • On a £2,000,000 loan: 1% = £20,000; 1.75% = £35,000.

Upfront vs. capitalised arrangement fees

Many lenders allow arrangement fees to be paid up front or capitalised (added to the loan). Capitalising increases the loan balance and interest paid over time — calculate both options to compare true cost.

When arrangement fees are refundable

Arrangement fees are rarely refundable; some lenders may return part of a fee if a commitment falls through for reasons within the lender’s control. Always check the small-print and conditions linked to any non‑refundable payments.

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Valuation & survey costs for hotels

Lenders require valuations to confirm security value and often request hotel‑specific assessments that consider turnover, occupancy and operator agreements.

Why lenders need a hotel valuation

Unlike standard commercial property, hotels’ value depends on trading performance, management agreements, brand, and seasonal income. Lenders use valuations to set LTV and covenant expectations.

Types of reports (and when each is used)

• Desktop valuation — quick, lower cost, used for smaller or lower risk transactions.
• RICS Red Book valuation — formal, comprehensive market value for security purposes.
• Specialist operator valuation / hotel feasibility — assesses income, repositioning or operator covenants.
• Structural/building survey — used for older buildings or when physical condition is a concern.

Typical costs and timing

• Basic lender desk valuation: £250 – £1,000.
• Full Red Book hotel valuation: £1,500 – £5,000+ depending on size and complexity.
• Specialist operator/feasibility reports: often £3,000 – £10,000+ for in-depth commercial advice.
• Timing: valuations typically take 1–3 weeks depending on surveyor availability and property access.

Legal fees — buyer, lender and third-party costs

Legal work on hotel purchases or refinancing can be more complex than standard commercial transactions due to operator agreements, licences and multiple leases.

Solicitor fees for purchase/refinance (what they include)

• Buyer solicitor: due diligence, title review, contract negotiation, SDLT advice — typical range £2,000 – £8,000+ depending on complexity.
• Lender solicitor: acting for lender on security documentation and searches — typically £500 – £2,500 (disbursements extra).
• Disbursements: searches, Land Registry fees, company searches, and other outlays often add several hundred pounds.

Other legal costs (title issues, operator agreements, SDLT)

Complex operator contracts, multiple tenancies, planning or environmental matters increase legal time and fees. Stamp Duty Land Tax (SDLT) should be calculated early — it can be significant on hotel purchases.

Broker fees and introducer charges — how brokers get paid

Brokers and introducers help source lenders and negotiate terms. Their charges can take different forms — it’s important to agree fees and transparency upfront.

Upfront broker fees vs success fees vs lender commission

• Upfront fee: paid before work begins — less common for mature brokers in hotel finance.
• Success fee (arrangement by broker): payable on deal completion — usually negotiated as a fixed fee or percentage.
• Lender commission: some brokers receive commission from lenders; this may be disclosed or bundled into the lender pricing.

Who pays the broker — borrower, lender or both?

Often the borrower covers broker fees, but in some cases brokers are remunerated by lenders. Always obtain a written fee disclosure to avoid surprises.

Transparency: what to ask a broker

• Ask for a written fee schedule and whether commissions are received from lenders.
• Request an explanation of any success fee, how it is calculated and when it’s payable.
• Confirm whether the fee is refundable if the deal fails due to lender issues.

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Other fees to watch (administration, exit, AML, insurance & VAT)

• AML / credit check fees: small administrative charges; lenders may require ID checks and verification costs.
• Commitment/review fees: ongoing facility fees for unused portions of the loan can apply.
• Exit/early repayment fees: some products include break costs or early repayment charges — important for short-term or sale plans.
• Insurance and licence costs: hotel-specific insurances and regulatory compliance costs are separate but relevant to lender assessment.
• VAT: professional fees may carry VAT — factor this in unless the supplier is VAT-exempt.

How to minimise fees & get the best deal

Tips on negotiating arrangement fees

• Compare multiple lenders — arrangement fees and terms vary widely.
• Ask for fee waivers or reductions in return for a slightly higher rate or longer relationship.
• Consider capitalising fees only when cashflow is tight; otherwise pay upfront to reduce interest costs.

When it’s worth paying a broker fee

Paying a broker can be worthwhile if they access specialist hotel lenders, negotiate better terms, or save time. Balance the fee against potential interest savings or improved covenants.

Preparing documents to lower costs and speed approvals

• Have recent management accounts, budgets, tenancy/operator agreements and proof of ownership ready.
• Organised documentation reduces lender and legal time — which often reduces professional fees.

How UK Business Loans helps hotel owners

We introduce you to lenders and brokers who specialise in hotel and hospitality finance. Our role is to match your enquiry (it’s not an application) with the best providers to quote for your deal. We work with loan sizes from around £10,000 upwards.

1. Complete a short enquiry with your deal details — it takes about 2 minutes. (Get Started Free Eligibility Check)
2. We match you to the most relevant lenders and brokers who can assess your hotel’s needs.
3. Receive quotes and cost breakdowns — compare and choose the option that suits your cashflow and plans.

For hospitality-specific finance guidance see our hotels industry page on hotels business loans.

Frequently asked questions

How much are arrangement fees for hotel loans?

Typically 0.5%–3% of the loan amount. The exact figure depends on lender, loan size and risk. Example: 1.5% on £1m = £15,000 (illustrative).

Who pays for valuations and surveys?

Usually the borrower pays for lender-required valuations and any specialist hotel surveys, though some costs can be included in the facility on agreement.

How much does a hotel valuation cost?

Ranges widely: lender desktop valuations £250–£1,000; full RICS Red Book valuations £1,500–£5,000+; specialist feasibility reports cost more.

What legal fees should I expect?

Buyer solicitor fees often £2,000–£8,000+; lender solicitors and disbursements add further amounts. Complex deals cost more.

Do brokers charge upfront fees?

Some do, many work on success fees or lender commission. Always get a written fee disclosure before instructing a broker.

Will a broker fee get me a better rate?

Not guaranteed. Brokers can access wider panels and negotiate terms, which may outweigh the fee in many cases — weigh cost vs benefit.

Are arrangement fees refundable if the deal fails?

Rarely. Refunds depend on lender terms — ask for written conditions before paying any upfront fee.

Will submitting an enquiry affect my credit score?

No. An enquiry through UK Business Loans does not affect your credit score. Lenders may perform checks later if you progress an application.

Ready for a quick, no-obligation quote?

Compare hotel finance options and get a clear breakdown of expected arrangement, valuation, legal and broker fees. Our quick enquiry is free and not an application — it helps us match you to the right lenders and brokers.

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Disclosure: UK Business Loans introduces businesses to lenders and brokers; we do not lend money or provide regulated financial advice.

1. How much are arrangement fees for hotel loans?
Typical arrangement fees for hotel financing range from about 0.5% to 3% of the facility (e.g., 1.5% on a £1m loan = £15,000).

2. Who pays for hotel valuations and specialist surveys?
Borrowers usually pay lender-required valuations and specialist hotel surveys, although costs can sometimes be capitalised into the loan or covered by the lender in specific deals.

3. What legal fees should I budget for when buying or refinancing a hotel?
Expect buyer solicitor fees typically of £2,000–£8,000+ with lender solicitor costs of roughly £500–£2,500 plus disbursements.

4. Do brokers charge fees for hotel finance and who pays them?
Brokers may charge upfront fees, success fees, or receive lender commission, and while borrowers often pay broker fees you should request a written fee disclosure to confirm.

5. Will submitting an enquiry through UK Business Loans affect my credit score?
No — submitting a Free Eligibility Check enquiry with UK Business Loans does not affect your credit score; lenders may run checks later if you proceed.

6. How quickly will UK Business Loans match my hotel enquiry with lenders or brokers?
You can typically expect to be matched with relevant hotel finance partners within hours after completing the quick enquiry form.

7. What loan amounts are available for hotel and hospitality finance through your network?
Our partners can arrange hotel financing from around £10,000 up to £10m+ depending on the lender and the borrower’s profile.

8. Can arrangement, valuation or legal fees be capitalised into the hotel loan?
Yes — many lenders allow fees to be capitalised into the loan, but capitalising increases the loan balance and interest payable, so compare total costs before choosing.

9. How can I minimise fees and get a better hotel financing deal?
Reduce fees by shopping multiple lenders, negotiating fee waivers for a higher rate or longer relationship, paying fees upfront when possible, and having organised documentation to speed approvals.

10. Is the Free Eligibility Check an application and does UK Business Loans provide regulated financial advice?
No — the Free Eligibility Check is a non-binding enquiry to match you with brokers and lenders, and UK Business Loans is an introducer that does not lend money or provide regulated financial advice.