June 04, 2005

Commercial Financing and Flagged Hotels

A Flagged Hotel is One That Belongs to a National Franchise

Hotel and motels are either flagged or unflagged. A flagged hotel is one that belongs to a nationwide franchise, like a Hilton or a Holiday Inn.

Flagged (franchised) hotels have the advantage of a uniform standard of appearance, cleanliness, layout, room sizes, relative pricing, and amenities (pool, restaurant, exercise room, etc.). Business travelors frequently use the same hotel franchise whenever they travel to a new city. For example, this author usually stays in a Hilton Hotel.

Fagged hotels enjoy the benefit of a nationwide reservation system. A business travelor can call Holiday Inns, for example, and find a Holiday Inn in almost every major city in America.

A hotel franchise costs money. A franchisee might pay 8% to 10% of its room rents to the franchisor for the use of the name, group buying power, and national advertising.

It is such an advantage for a hotel to be flagged that many commercial mortgage lenders will not lend to unflagged hotels and motels.

You can find hundreds of lenders for hotels and motels, for both flagged properties and unflagged ones, on C-Loans.com.