St. George, UT hotel owners finance franchise-required upgrades by splitting them: furniture, fixtures and equipment on equipment financing or a term loan, building work on a term loan, and working capital for payroll while rooms are out of service.
Written for hotel and motel owners in Washington County, Utah, this Tealwood Funding Group article explains how they fund brand-required upgrades and FF&E, with Washington County lodging counts, an invented example and an offer checklist. Mortgages are not covered.
The Short Answer: Split FF&E, Building Work and Operating Cash
A brand's property improvement plan lists what must change and by when: casegoods, soft goods, bathrooms, corridors, PTAC units, lobby and signage. Split the list into three: items with resale value (FF&E), building work, and the cash the property needs while rooms are closed.
FF&E fits equipment financing or a term loan. Building work fits a term loan. The cash gap fits working capital. Tealwood Funding Group does not arrange hotel mortgages; a property refinance goes to a real estate lender.
Illustration only, invented figures: a 64-room hotel replaces casegoods at $4,200 a room, soft goods at $1,350 and PTAC units at $1,160. FF&E totals $429,440 (our arithmetic). Over 84 months at an annual rate of 10.25%, the payment is about $7,185 a month and the interest about $174,084 (our arithmetic).
Brands sometimes contribute to required upgrades through incentives or key money. Ask the brand what it offers before sizing the request; any contribution reduces the amount financed.
Hotel Renovation Loan When a Washington County, UT Motel Keeps Payroll Through Room Closures
A motel closing rooms floor by floor still pays housekeeping, front desk and maintenance staff. A hotel renovation loan can include a working capital piece sized to the payroll and fixed costs during the closures, less the revenue the open rooms bring in.
Plan the closures against the property's own occupancy history. Its monthly records show which months carry the least revenue risk.
Partners read occupancy, average daily rate and revenue per available room by month, plus the brand letter and the contractor's schedule.
Count the cost of rooms out of service as part of the project budget. Lost room nights are real revenue, and a partner reading the request wants to see that the owner has counted them.
Documents St. George, UT Motel Operators Gather First
- The brand's property improvement plan or standards letter, with deadlines.
- Itemized FF&E quotes and the contractor's bid.
- Two to three years of tax returns and profit and loss statements.
- Monthly occupancy, ADR and RevPAR reports.
- The franchise agreement and its remaining term.
- Existing loans on the property and the business, with balances.
The franchise term matters: a partner financing FF&E over seven years wants to know the flag stays for at least that long.
If the property is changing brands rather than meeting its current brand's plan, bring the new franchise agreement and the conversion plan. A conversion can require more work than an upgrade, and the request should show all of it.
Common Gaps in a Loan Request From Washington County, UT Motel Operators
Gaps that slow a hotel request: an improvement plan without costs attached, FF&E quotes that bundle installation and freight without itemizing, occupancy figures that do not match the returns, and no plan for the cash gap during closures.
Another gap is the mortgage. If the property has a mortgage, its lender may need to consent to new debt or liens on FF&E. Check the mortgage terms before applying.
The hotel page covers PTAC units, laundry and room refreshes.
A third gap is a contractor without a schedule. Partners releasing funds in stages want to know what will be finished when, and how the property will operate during the work.
How St. George, UT Motel Operators Compare Two Offers
Compare offers on the same basis: amount, term, rate, fees, collateral, personal guarantee, prepayment terms and covenants. A lower payment on a longer term can cost more in total.
Covenants deserve a close read. A minimum debt service coverage ratio tested during a renovation, when revenue is down, can be harder to meet than one tested after. Ask how each offer measures it.
Write the totals side by side: total of payments, fees, and the cost of any required reserves.
Ask each partner how funds are released: in one payment at closing, against invoices, or in stages after inspections. Staged release protects both sides but needs paperwork at each step.
Washington County, UT Lodging Counts Behind the Question
Traveler accommodation in Washington County, UT counted 93 employer establishments in 2023, with 2,138 paid employees and $62.1 million in payroll; hotels (except casino hotels) and motels made up 87 (County Business Patterns). Traveler accommodation with a ZIP 84770 address numbered 30.
Nonemployer Statistics counted 135 traveler accommodation businesses without paid employees in the county in 2024, a separate program.
More county figures are on the St. George, UT page.
By Tealwood Funding Group · Updated
