Bridging finance for hotels

Why hotel operators are turning to bridging

Bridging finance gives hotel owners speed and certainty when conventional lenders move slowly. In early 2025 the UK market has stayed busy, with quarterly completions around £2.8 billion and new applications jumping sharply. That momentum matters because it signals lenders have capital to deploy and the appetite to fund time-sensitive hospitality deals. For a hotel purchase at auction, an urgent refinance, or a refurbishment that unlocks higher room rates before peak season, access to quick liquidity can determine whether value is preserved or lost.

Pricing has edged lower, too. Average monthly bridging rates have eased to roughly 0.81% in Q2 2025, while loan-to-value has typically sat in the mid-50% range. That combination - slightly cheaper funding with conservative leverage - can work well for hotels that need short-term capital without overextending the balance sheet. Completion times are faster as well, with many transactions closing in about 41 to 43 days, and some achieving rapid turnarounds where due diligence is straightforward.

The use cases are widening. Refinancing has risen as owners manage covenant resets or lender exits, and investment purchases account for a meaningful share of activity. Crucially, specialist and institutional lenders are comfortable with larger hospitality exposures, including multi-million-pound facilities for portfolio recapitalisations. A market that is deeper, more competitive and faster to execute allows hoteliers to solve short-term challenges while lining up a longer-term solution.

Understanding APR is not just about percentages - it is about the total you will pay over the term and how reliably you can exit. Bridging works best when the end game is defined from day one, whether that is sale, refinance or a stabilised operating plan that supports term debt. Choose a broker who understands hotel cash flows, seasonality and valuation drivers so the structure is realistic and lender-ready.

Who benefits in hospitality

Bridging suits UK hotel owners and operators who need capital quickly and have a credible exit plan. That can include independent hoteliers facing a refinancing deadline, portfolio owners consolidating debt across assets, and investors purchasing at auction where completion must happen in days, not months. It also supports value-add plans such as room refurbishments, energy upgrades or rebranding to improve RevPAR before the peak trading window.

Mixed-use properties with an owner-occupied element may sit near regulated lending boundaries, so careful structuring matters. The strongest candidates typically have verifiable trading data, experienced management and assets in locations with robust demand drivers. If your business case is clear and the timetable is tight, bridging can be the right tool to protect value and momentum.

Funding routes you can consider

1. Classic bridging - short-term interest-only loan secured on the hotel.

2. Refurbishment bridging - funds works with staged drawdowns and monitoring.

3. Acquisition bridging - supports auction or time-critical purchases.

4. Re-bridging - replaces an existing bridge approaching maturity.

5. Development exit - bridges from practical completion to stabilised trading.

6. Portfolio bridge - cross-collateralises several assets under one facility.

Speed is the single biggest advantage - the structure should serve the exit, not the other way round.

Costs, timelines and risk profile

A slightly lower rate is helpful, but clarity on fees, monitoring costs and legal complexity often has a bigger impact on the final pound cost. Conservative LTV plus a documented exit usually achieves the best overall economics.

Who is eligible

Lenders focus on the asset, the operator and the exit. For hotels, that means a professionally prepared valuation, credible trading history or a robust business plan if the asset is under-managed, and evidence that the property can service debt or be refinanced once your plan is executed. Strong eligibility signals include experienced hospitality management, transparent accounts, realistic assumptions on ADR and occupancy, and location fundamentals such as transport links or corporate demand.

Where mixed-use or owner-occupied elements exist, regulated rules may apply and must be assessed at the outset. Sensible leverage - typically in the mid-50s percent LTV range - helps accommodate any valuation movement during the term. Kandoo can help position your case, selecting lenders who understand seasonality, F&B margins and capex timelines, and ensuring legals and valuation are booked early to keep the timetable on track. If you have secondary security or additional collateral, that can widen lender appetite and improve terms.

From enquiry to drawdown

1. Share the asset details and capital requirement.

2. Define the exit - sale, refinance or stabilisation.

3. Obtain valuation terms and instruct legals early.

4. Provide trading data and business plan evidence.

5. Lender issues heads of terms for agreement.

6. Due diligence completes - valuation, legal and KYC.

7. Facilities signed - conditions precedent satisfied.

8. Funds released to complete purchase or refinance.

Upsides and trade offs

Before you proceed

A bridge must be built around the exit. Model several scenarios - including a slower sales market or a valuation haircut - to see whether your plan still holds. Check covenant requirements on any take-out lender so there are no surprises when you refinance. Ensure the refurbishment scope, contractor availability and delivery timeline are validated in writing, with contingency for cost inflation and delays.

Accurate, lender-ready data accelerates completion. Prepare up-to-date management accounts, occupancy and ADR trends, capex breakdowns and evidence of brand or operator agreements. Agree early on whether interest will roll up or be serviced and confirm how fees are paid. If you are buying at auction, align the completion date with the likely drawdown window, and keep a backup plan if legal diligence uncovers title or licensing issues.

Alternatives if bridging is not right

1. Term commercial mortgage - lower cost, slower to arrange.

2. Mezzanine finance - supplements senior debt at higher pricing.

3. Asset-backed revolving credit - secured against receivables or equipment.

4. Sale and leaseback - frees equity while retaining operational control.

5. Private equity or JV capital - dilutive but can fund heavy capex.

6. Vendor financing - seller provides part of the purchase price.

Questions, answered

Q: How fast can a hotel bridge complete? A: Many complete in roughly 41 to 43 days. With early valuation and clean legals, some lenders can move faster for straightforward assets.

Q: What rates should I expect in 2025? A: Market averages have eased to around 0.8% per month, but pricing depends on asset quality, leverage, location and the clarity of your exit.

Q: How much can I borrow against a hotel? A: Typical LTVs sit in the mid-50s percent range, sometimes higher with strong assets or additional security. Conservative leverage often secures better terms.

Q: What are the main risks? A: Exit failure, valuation volatility and timeline slippage. If the sale delays or refinance criteria change, extensions or re-bridging can increase total cost.

Q: Can I finance refurbishment as part of the bridge? A: Yes. Many lenders fund works with staged drawdowns subject to monitoring, helping you deliver improvements that support the planned refinance.

Q: Are regulated products relevant to hotels? A: Hotels are commercial assets, but mixed-use or owner-occupied elements may engage regulated rules. Early assessment with a specialist broker is essential.

How Kandoo helps

Kandoo is a UK-based retail finance broker with access to specialist bridging lenders who understand hospitality. We package your numbers, align structure to the exit and run a competitive process to secure terms. If speed matters, we prioritise valuation and legal milestones to keep your timeline intact. Speak to us for lender-matched, hotel-specific funding options.

Important information

This guide is for general information only and does not constitute advice. Bridging finance is secured against property and your asset may be at risk if you do not keep up repayments. Always seek independent legal and tax advice before committing.