A thorough analysis of the project's feasibility is conducted. This firstly takes into account your typical development finance criteria and then factors such as the hotel management team, hotel occupancy agreement, projected occupancy/room rates, local competition, and the overarching trends in the hospitality industry.

Given the complexity of hotel projects, financial structuring often involves a mix of debt, equity, and sometimes even mezzanine financing. Careful consideration into the ‘trading up’ period on completion is also considered with provision for capitalised interest usually provided.

The funds are not disbursed in one go but are usually released as per the construction milestones on a cost to complete basis certified by a Lender appointed Quantity Surveyor.

Given the substantial sums involved and the longer-term nature of hotel returns, lenders often look for a clear exit strategy. This could be through the hotel's sale, refinancing, or from its operational revenues once it becomes fully functional.