Minibar and Loan Market Update from Bridge, November 2026

Welcome back to the Minibar + Loan Market Update, your monthly shot of what’s moving hotel financing. This is our October and November edition.

My name is Rohit Mathur (still typing these myself). I’m the co-founder and CEO of Bridge, a direct lender and marketplace for hotel loans. Before founding Bridge, I spent 10+ years at Citi in capital markets.

Last month I told you we were about to change something that hasn’t changed in 100 years. We did. We cut the broker fee on hotel loans from 1.00% to 0.50%. There’s a full section below on why, with the chart that convinced us.

We also told you about some of the SBA changes, which were walked back a week before implementation, updated chart included.

Rates: The Fed Paused. The Pressure Didn’t.

Everyone underwrites to a DSCR or a debt yield. That’s why rate moves hit your loan amount before they hit your interest line.

The Fed held at 3.75% to 4.00% on October 28. The vote was 10 to 2, and both dissents wanted a hike. Lisa Cook and Beth Hammack, not the usual hawks. Warsh said the committee wants an accumulation of more information before the next move. The market read that as December.

Here’s the chart I keep coming back to. Two years of Fed decisions against the inflation print the Fed had in hand when it made each one.

Three things to take from it. First, the Fed cut three times in late 2025 with CPI between 2.7% and 3.0%. Second, inflation then ran from 2.4% in February to 4.2% in May, and the Fed didn’t move until September, when the August CPI was 3.4%. Third, the September CPI, the first print covering the month of the hike, came in at 3.7%. Inflation went up after the hike, not down. That’s the whole reason December is priced the way it is.

CME futures put the odds of a 25 bps hike on December 9 at about 85%, up from 42% a month ago. The talk in the market has moved to whether 25 is enough. With two dissents already on the record and CPI at 3.7%, a 50 bps move is no longer a fringe view, though it’s not the base case. The September dot plot had the median at 4.1% for year end and 4.1% again for the end of 2027. No cuts anywhere in the Fed’s own forecast for the next 14 months, and that forecast was written before the 3.7% print. December brings a new one.

Here’s where the rates that matter to your deals sit today, against a month ago and a year ago:

Sources: Federal Reserve H.15 (October 29 for Treasuries, October 30 for the 10-year close), NY Fed SOFR, BLS CPI.

Look at the right-hand column. The policy rate is exactly where it was a year ago. The 10-year is 84 bps higher. That’s the bond market telling you it doesn’t believe inflation is coming back to 2%, whatever the Fed does in December. For anyone pricing fixed-rate debt, the Fed meeting is noise. The 10-year is the signal, and it has spent two months between 4.94% and 5.31%.

What a higher coupon does to your loan

Most owners think about rate as a cost. Another 50 bps on $25M is $125,000 a year. Annoying, survivable. That’s the wrong way to look at it, because that’s not how the lender sizes the loan.

Every lender in this market sizes to a coverage test. 1.30x DSCR is typical for a bank or life company on stabilized select-service. 11 to 12% debt yield is the floor most CMBS and debt fund desks are using right now, and below that fewer shops will even quote. The lender takes your NOI, divides by the required coverage, and that’s the most debt service they’ll allow. The coupon then decides how much loan that debt service buys.

So take an example deal. Select-service hotel, $3.0M NOI, 25-year amortization, sized to the lesser of 1.30x DSCR and an 11% debt yield. The borrower is asking for $25M.

Bridge illustration. $3.0M NOI, 1.30x DSCR, 11.0% minimum debt yield, 25-year amortization. Rounded.

Read the third column. On every row where the 1.30x test binds, debt service sits at the same $2.31M ceiling. Raise the coupon and the payment stays put. What changes is the loan: $27.2M at 7.0%, $26.0M at 7.5%, $24.9M at 8.0%.

At 7.0% and 7.5% the $25M request works. At 8.0% it doesn’t. Max proceeds drop to $24.9M, about $84,000 short of the request, and the gap between the 7.0% and 8.0% maximums is $2.3M. Either way the borrower is writing a bigger equity check, going back to the seller, or dropping the deal. Fifty basis points of coupon is 4.4% of proceeds. One hundred basis points is 8.4%. That’s the number to carry in your head when you read a Fed headline. That shortfall is coming from your equity.

Two things that make this worse in practice. First, the 11% debt yield cap is a floor, not a ceiling. Debt funds and CMBS desks are quoting tighter than that on anything with a story, and the average new CMBS hotel loan this year is carrying a 12.7% debt yield. At 12.7% the max loan on this hotel is $23.6M regardless of coupon. Second, cap rates have not kept up with the 10-year. Deals trading at 8.2% to 8.4% with a 7%+ fixed coupon have very little positive leverage left, which is why we’re seeing Q4 contracts get repriced or flipped to floating.

On floating. SOFR is roughly where it was a year ago while the 10-year is about 85 bps higher. That’s an unusual shape and it’s why more of our borrowers are taking short-term, floating, prepayable debt with a cap and keeping the option to term out later. On a five-year hold that’s not a bet on cuts. It’s a refusal to lock a 5% base rate at the top of the range.

My two cents: stop reading rate moves as a change in your interest expense. Read them as a change in your loan amount. Every 25 bps the Fed adds is roughly 2% of proceeds on a DSCR-sized loan. December is an 85% hike and 50 bps is on the table. If it’s 50, your lender’s term sheet in January is 4% smaller than the one you could get signed today. Get it signed.

We Cut Our Broker Fee in Half. Here’s the Chart That Did It.

Hotels got expensive. Placing the loan got cheap. The fee never moved.

As you know Bridge has two motions: Direct Lending + Brokerage. The hotel mortgage broker fee has been 1% for as long as anyone in this industry can remember. Nobody questions it because it’s small next to the loan. On a $20M loan it’s $200,000. Owners pay it, shrug, and move on.

We started pulling the number apart earlier this year and it stopped making sense.

The blue line is what it costs to build a hotel, per key, from our construction index. It’s up 63% since 2015. Loans scale with cost, so a 1% fee on a 2026 loan is 63% more dollars than the same fee on a 2015 loan for the same hotel.

The dark line is our estimate of the hours it takes to place a stabilized select-service loan (we think it’s even lower with AI). We can’t show you anyone else’s time sheets, so this is a Bridge estimate. But we were doing this work in 2015, and the inputs have changed completely. In 2015 you built the model by hand, you typed the STR report into Excel, you wrote the OM in Word, and you called lenders one at a time. In 2026 the performance data comes in through an API, the model builds itself off the T12, and the deal goes to 20 desks at once with their sizing already run. We put the work at roughly 300 hours then and 120 hours now. If anything that’s conservative.

Put those two lines together on a real hotel:

Bridge illustration. 2015 cost per key is a round number for a secondary-market select-service build; 2026 escalates it by the BHCI total index (+63%, January 2015 to September 2026). The BHCI covers hard costs and FF&E only, so applying it to an all-in per-key figure assumes land and soft costs moved in step. Hours are Bridge’s estimate, not an industry survey.

The fee per hour of work went up four times. The owner didn’t get a better loan for it. The lender didn’t get a better package. The spread between what the work costs and what the work is billed at opened up, and all of it went to the broker.

We think that spread should be shared with the owner and the developer. So as of this month, Bridge charges a 0.50% broker fee on hotel loans.

The terms, plainly:

• 0.50% broker fee, half the industry standard.
• Available to owners referred through our brand and association partners: Hilton, Choice, Wyndham, Hyatt, Red Roof and AAHOA.
• Exclusive engagements of $10M or more. Multiple deals can be combined to get there.
• Not applicable for SBA or ground-up construction, different fee structure.
• For the Bridge Direct channel, we have fees built into the upfront fees.

On the $16.5M loan in the table above, that’s $82,500 back in the owner’s pocket. On a $30M refinance it’s $150,000. That is real money to a family that owns three hotels, and it’s money that was going to a fee that hadn’t been examined since fax machines.

Details and the sign-up form are on our 0.50% hotel placement fee page.

My two cents: I spent a decade at Citi watching the cost of executing a bond deal fall every year while the fee held. The equity and debt capital markets eventually repriced because clients demanded it. In 1994 individuals were charged 1.75% for stock trades, then E*Trade came in and changed that completely, reducing the fee in half!

Hotel lending hasn’t had that moment because nobody has had the data to make the argument. Now you do. If your broker is still charging 1%, ask them what they’re doing with the other 180 hours. 1994 for Hotel Lending is today.

At the end of the day you should pick Bridge for our service and because we are faster and better than anyone else at getting you the best terms in the market. But it doesn’t hurt to have lower fees, right?

SBA: The Changes That Weren’t

On September 25, the SBA walked back the two October 1 rules that hurt hotel buyers most. The rest stayed.

Last month I told you the October 1 SOP change was the SBA story of the year for hotel acquisitions. Projections were out of the DSCR test. The 25-year amortization on the business portion of a hotel purchase was gone.

Eleven days later, on September 25, SBA reissued SOP 50 10 8.1 with what it called technical updates. Effective October 1, same date. The August version never took effect. NAGGL told its members to destroy their copies.

It wasn’t a rollback. Most of the August text stayed. But the two items that mattered most for a hotel purchase came back, and the ownership rule that disqualifies a big share of AAHOA deals did not move. Here’s the scorecard:

Source: SBA Information Notice 5000-882227 (September 25, 2026), NAGGL, Coleman Report, Starfield & Smith and Commercial Lending X summaries.

Why the amortization matters more than it sounds. Take a $3.0M 7(a) loan at 9.75%. On a 10-year schedule for the business portion, annual debt service is about $470,800. On the restored 25-year schedule it’s about $320,800. A hotel with $550,000 of EBITDA covers 1.17x under the first and 1.71x under the second. Same hotel, same price, same loan. Under the August rule that deal fails the 1.25x floor. Under the restored rule it passes with room to spare. This is a simplified term comparison on the full $3.0M; a real mixed real-estate and business loan is modeled on its actual allocation and the blended term that applies.

The projections point is narrower than it looks. The exception is for fully secured special-use loans where the DSCR is reached within two years. That’s a hotel with a PIP and a credible operator, and it’s the exact deal I described last month: $650,000 of historical EBITDA, $600,000 of debt service, 1.08x today, 1.50x after the renovation. In August that deal was dead. In October it’s a conversation again, as long as the real estate fully secures the loan. If you’re buying a leasehold or a thinly collateralized asset, you’re still on historical numbers.

What didn’t change is what I’d worry about. The citizenship rule has been in place since March 1 and it is the single most common reason I’m seeing hotel deals fall out of SBA this year. Every direct and indirect owner, U.S. citizen or national, principal residence in the U.S. A lawful permanent resident with a 5% interest is a disqualifier. Review the cap table before anyone orders an appraisal.

On timing, the notice is explicit: the new text applies to applications received by SBA on or after October 1, 2026. Applications submitted through September 30 stay under SOP 50 10 8. If you had a file in the queue in late September, get your lender’s position in writing anyway.

My two cents: the SBA listened. If you killed a hotel acquisition in September because of the amortization change, reopen it this week.

What PwC and ULI See for Hotels in 2027

Five things from the Emerging Trends in Real Estate 2027 report worth your time. Plus one place I disagree.

PwC and the Urban Land Institute put out Emerging Trends in Real Estate every fall. It’s the one survey the institutional side actually reads: 500+ interviews, close to 1,000 survey responses, 48 years running. The 2027 edition came out in October. I read the whole thing so you don’t have to. Here is the hotel-relevant part.

Key takeaways from the hospitality section:

Source: PwC / ULI, Emerging Trends in Real Estate 2027, pp. 75-78, 50.

1. Markets to watch

The headline ranking is overall real estate prospects, not hotels specifically, but the top of the list is where the capital is going and that’s where the hotel demand follows. Here’s the top 20 with the year-over-year move:

Source: PwC / ULI, Emerging Trends in Real Estate 2027, Overall Real Estate Prospects, p. 105.

What jumps out. Six of the top ten are in the Southeast or South Central. San Francisco went from 45th to 5th in one year, which is AI office leasing and conventions coming back. Columbus and Knoxville are the two big risers outside the coasts, both on data center and manufacturing money. And Las Vegas fell 50 spots to 78th, the biggest drop in the survey. Austin recovered from 30th to 21st. Seattle fell from 22nd to 38th.

The hotel detail inside the market profiles: Nashville had 17.4 million visitors spending $11.6 billion, BNA set a record at 26.7 million passengers, and the Titans stadium opens in 2027. Miami had 28.3 million visitors and Miami Worldcenter is adding 1,700 hotel rooms plus 600,000 square feet of meeting space. Florida repealed its commercial rent tax. Dallas has the convention center overhaul, two DFW terminal rebuilds and a $2.5 billion Love Field expansion starting in 2027.

2. RevPAR by chain scale

Every segment except economy is growing faster in 2026 than in 2025. Luxury more than doubled its growth rate. Upper midscale and midscale, which were negative last year, are positive now. Economy went from -1.5% to -3.1%. That lines up with what Kalibri showed us last month: economy demand is down on government and corporate, not leisure, and it’s structural.

3. Buy, don’t build

This is the report’s main hotel argument and it’s blunt. “In high-cost markets, existing properties can often be acquired significantly below the cost of developing comparable new product.” A senior hospitality executive they interviewed put it this way: “If you can buy below replacement cost, why would you build?” Hospitality is named as one of three sectors, with logistics and non-overbuilt multifamily, that benefit first from the coming supply gap because new construction is cost-prohibitive.

The pipeline numbers back it up. Rooms under construction are flat against 2024 and 2025. Final planning is up and proposed rooms are elevated. But the report’s own words are that this activity “has yet to translate into construction.” Lodging Econometrics said the same thing last week: 5,901 projects in the pipeline, down from 6,205 a year ago, and the 2026 opening forecast has been cut from 754 hotels a year ago to 598. There’s a glut of projects on paper and very little movement off it. Financing, replacement cost and labor are holding the line.

Here’s the counterpoint. Yes, the sentiment is buy, don’t build. I agree with it for most owners in most markets. But the developers who do build now will have the newest asset in their market in 12 to 24 months, into a supply pipeline that everyone else just walked away from. New product takes rate. A new-build Home2 or Tru opening into a market with 1% supply growth and a tired comp set is going to post a RevPAR premium and trade at a tighter cap rate than the 2008-vintage asset down the street. The report says it itself: deferred capex is widening the gap between well-capitalized and underinvested hotels. Nothing is better capitalized than a brand-new building. If you can get the construction loan, and that’s the hard part, the next two years are a good time to be the only new hotel in town.

4. The K is becoming a C

Last year’s report called the hotel market K-shaped: luxury up, everything else down. This year they say it’s turning into a C. Upscale and upper midscale flipped from negative to positive. Economy is the only segment still falling and it got worse. The pressure is now concentrated at the bottom instead of spread across everything below luxury.

The more useful point is the next one. Chain scale is, in their words, “a less complete explanation” of performance than it used to be. Extended-stay hotels in markets with data center, energy and infrastructure construction are capturing sustained project-based demand regardless of where they sit on the chain scale. A midscale extended-stay next to a $7.8 billion data center build in Phoenix is not behaving like a midscale hotel. That’s the Dallas, Phoenix and Columbus story, and it’s why we keep saying extended stay is the preferred format. The report’s phrase is that performance is now determined by “local demand drivers, customer mix, and individual asset characteristics.” Translation: underwrite the submarket, not the flag.

5. Deferred capex is the next distress

The quietest line in the section is the most important one for anyone with capital. Hotels that deferred spending are “now facing aging guestrooms, property improvement requirements, and higher debt-service costs. That is widening the gap between well-capitalized properties and underinvested properties, while creating opportunities for buyers with capital to acquire and reposition tired assets.”

Read that against the CMBS data. Lodging delinquency went from 5.35% in July to 6.18% in September. $18.7 billion of hotel CMBS matures in 2026, 70% of it floating. A 2021 loan at 4.5% refinanced at 7% or more leaves a proceeds gap, and the owner with a PIP due has nothing to fill it with. That’s not systemic distress. The report calls it “situational” and says most of it gets resolved through “silent foreclosures and negotiated recapitalizations” that never show up in the data. But it is a steady stream of tired, well-located hotels that need a buyer with a PIP budget and a lender who understands conversions.

My two cents: the report confirms what we’ve been saying in this newsletter since the spring, which is nice, but the part I’d act on is the one they underplay. The gap between the hotel that got its PIP done and the one that didn’t is going to show up in RevPAR, in cap rate and in loan proceeds, all at once, over the next 18 months. If you own the one that didn’t, the fix gets more expensive every quarter you wait. If you’re a buyer, that’s your pipeline. Either way, that’s a conversation worth having with us before year end.

Bridge Hotel Construction Index: September Update

Hotel hard costs up 7.9% on the year. The gap to Turner is 12.5 points and the drivers haven’t changed.

Quick refresher for anyone who joined last month. The BHCI tracks what it costs to build a 120 to 175 key select-service or extended-stay hotel, month to month, holding scope constant. Weights come from real GC schedules of value on Bridge deals, priced against BLS producer price and construction wage data. January 2019 = 100. No land, no soft costs, no developer fee, no contractor margin. It’s an escalation index, not a cost-per-key reference.

BHCI as of September 2026, BLS data released October 2026. Turner Q3 2026 released October 13, 2026, rebased to Q1 2019 = 100. The August hard-cost level revised from 150.4 to 150.3 with the BLS revision.

What moved. Hard cost added 0.7% in September alone. On the year, 7.9%. The contribution table is the same story as August, with the order unchanged:

Source: BHCI build, BLS PPI and CES, AGC analysis of BLS data (October 15, 2026).

Turner moved faster than we did this quarter. Turner printed a 1.48% quarterly gain, the biggest since 2023, and its year over year accelerated for the third straight quarter: 4.87%, 5.15%, now 5.49%. Turner’s own commentary names mechanical and electrical labor as the constraint and says material cost pressure is back. That’s our top three contributors, a quarter late. So the gap between hotel costs and the broad market narrowed slightly, from 13.7 points in August to 12.5 points today. I wouldn’t read anything into it. The broad index is catching up to the hotel-specific one, not the other way around.

The number that worries me is upstream. BLS input prices for nonresidential construction are up 11.9% year over year as of September, the fastest in four years. Bid prices are up 5.4%. Contractors are eating the difference because demand outside data centers is soft. That doesn’t last. When the input inflation reaches the bids, the BHCI will catch it before Turner does.

My two cents: if you have a GMP that’s more than six months old, the number is stale by 4% on our index and the GC knows it. If you’re carrying a 5% contingency against a 7.9% annual run rate, your contingency is gone by month eight. Carry 7.5% minimum. If you’re SBA 504, confirm the contingency with your lender and CDC; SBA policy permits up to 15% of construction costs.

About Bridge

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Bridge Minibar Update

~60 days to year end.

The minibar is restocked for the closing sprint and the office is open. Our holiday party is scheduled for December 10th, so if you get a slow response that Friday, you know why!