Often a borrower wants a quick answer on whether a hotel is eligible for a CMBS conduit loan without providing much information. A way to make a quick assessment is to look at TripAdvisor reviews. But before that, the first step in making an assessment is to “google” the address and look at the photos presented to determine if the hotel is an interior corridor property. CMBS conduit loans are generally available for interior corridor hotels. Typically, the only exception to this rule is if the property is located on the beach. Next, compare the franchise brand with the list provided in this link. All categories except Economy are eligible for a CMBS conduit loan. Once you have passed these two tests, it’s time to determine what condition the hotel is in and how well it is run.
How can that be done without seeing the hotel and interviewing management? The solution is TripAdvisor. Owners have a love/hate relationship with property review sites (mostly hate) because, as one owner said, “Anyone can post anything with no repercussions for misleading information.” Nevertheless, the CMBS conduit industry has developed a rule of thumb for well-run hotels in good condition using TripAdvisor reviews.
Type the name of the hotel in the “google” search bar followed by “TripAdvisor” and you will find a TripAdvisor link for the hotel. Click on it and then scroll down to the “Overview” section listing the percentage of reviews that are “Excellent,” Very Good,” “Average,” “Poor” or Terrible.”
If “Excellent” and Very Good” ratings combined (add the two percentages together) exceed 50% you have a hotel that is likely well run and in good shape, and it likely would be fine for a CMBS conduit loan. If the combination exceeds 75%, you are probably looking at one of the top hotels in the market that would be very easy to get approved for a CMBS conduit loan.