Independent Banker - December 2021 - 19

data. " I'm quite sure they are
pleased with how we were able to
assist in the process of getting them
through to the proverbial other side
of this. "
The Coronavirus Aid, Relief, and
Economic Security (CARES) Act
provided an important backstop
for Small Business Administration
(SBA) 7(a) loan holders, as it
required the SBA to take care of
loan payments for about six months
in 2020 and make partial payments
in 2021.
" That has really helped many of
our 7(a) clients, " says Mark Duffy,
president and CEO of Mountain
Pacific Bank in Everett, Wash. For
other borrowers, the $596 millionasset
community bank allowed
deferrals of principal or, in some
cases, full payment deferrals.
Most of the forbearance
borrowers requested has burned
off as hotel operators have started
to get back on their feet. At the
pandemic's peak, Mountain
Pacific Bank had five hotel loans
on deferral, whereas all those
borrowers were making their
loan payments again as of August
2021. However, borrowers are still
working on making good on the
deferred payments.
" We are hoping that when things
return to normal that the regulators
will allow us to capitalize the
interest that has been deferred,
because some of these guys might
have difficulty catching up and
paying that, " Duffy says. Another
option would be to do a separate
loan to amortize those deferred
payments, which again would be
dependent on regulators, he adds.
New loan demand returns
Industry data clearly shows that
recovery is underway, although
some segments and regions are
Hospitality's improving outlook
Hotels owners and operators are notching steady improvement
in key metrics, which, for many, is putting operations back in the
black. However, a full recovery for the industry is still months away.
According to STR and Tourism Economics, full recovery
of demand is expected in 2023, and revenue per available
room (RevPAR) is not expected to surpass 2019 levels until
2024. However, it's important to note that the 2019 recovery
benchmark-66% for occupancies, $86.35 for RevPar and $130.91
for average daily rates (ADR)-were all at or near all-time highs. So,
even inching toward those levels will be a win for many operators.
The 2021 forecast calls for the U.S. hotel industry occupancy
to average 54.7%, ADR of $115.50 and RevPAR at $63.16. Looking
ahead to 2022, those metrics are projected to improve further
with occupancies rising 13%, RevPar by 19.7% and ADR by 6%. STR
and Tourism Economics points out that the recovery is " uneven "
with some leisure-driven markets ahead of where they were prior
to the pandemic and most major metros, such as New York City,
San Francisco and Boston, still off that pace.
In addition, operators face challenges ahead, including rising
labor costs and a surge in the delta variant, which is slowing
demand from business and leisure travelers. According to
an American Hotel & Lodging Association survey, U.S. leisure
travelers plan to significantly pare back their future travel plans,
with 69% planning to take fewer trips, 55% planning to postpone
existing travel plans and 42% likely to cancel existing plans
without rescheduling.
But that doesn't mean they don't plan to travel entirely.
Nearly three in four (72%) are likely to travel to places within
driving distance.
faring better than others. Driveto
destinations, for example, have
bounced back more quickly, while
large convention hotels in major urban
markets continue to struggle due to
the slow return of business travel and
corporate events, according to STR.
The recovery has triggered demand
for new loans as operators look to
restructure financing or capitalize
on growth opportunities. In the past
year, State Bank of Texas in Dallas
has originated close to $250 million
in conventional loans nationwide for
acquisitions, refinancing of existing
loans and even a limited number of
construction loans.
" For the most part, fundamentals
have come back, although there is
a difference depending on the type
and the location of the property, "
says Sushil Patel, president of the
$1.25 billion-asset, family-owned
community bank.
Hospitality lending is a natural
fit for the State Bank of Texas.
Chairman and CEO Chan Patel has
been an active owner and operator
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Independent Banker - December 2021

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