Hotel Construction Loans in 2026: The Return of Bank Lending Comes With Tighter Conditions

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The Hotel Blueprint

Five regional banks say they’re ready to write commercial real estate loans again. The fine print — smaller loan-to-cost ratios, higher debt-coverage thresholds, and a growing reliance on syndication and private-credit partners to share the risk — tells owners something more specific about what a hotel construction loan or refinancing will actually look like in 2026.

Hotel construction financing is, by most measures, open again in 2026. Regions Financial, PNC, M&T Bank, U.S. Bancorp and KeyCorp all told investors on their fourth-quarter 2025 earnings calls that commercial real estate lending has stabilized after nearly three years of retreat, and the Federal Reserve’s July 2026 survey of loan officers found banks easing commercial real estate standards by the widest margin since early 2022. None of that is a forecast or a talking point pulled from a bank’s investor deck — it is what banks are telling regulators and shareholders about loans they are actually writing. But “open” is doing a lot of work in that sentence. For a GM or owner-operator with a loan maturing in the next eighteen months, what matters is not whether banks are lending again in the aggregate — it is whether the terms attached to that capital, and the disproportionate share of hospitality debt coming due in 2026, add up to a financeable deal.

1. What the banks actually said

The clearest signal came from bank chief financial officers describing their own books. M&T Bank’s commercial real estate portfolio contracted 1 percent in 2025 to $24.1 billion, which CFO Daryl Bible characterized as a sign the decline was slowing rather than reversing. PNC’s Robert Reilly told investors the bank’s CRE balances had “largely stabilized” and pointed to moderate growth ahead across its $328 billion loan book. U.S. Bancorp reported its first uptick in CRE lending in nearly three years, driven by multifamily and industrial originations, with CFO John Stern noting that the bank’s office exposure — which had fallen by roughly $3 billion over three years — was no longer shrinking as quickly. KeyCorp’s chairman and chief executive, Christopher Gorman, was more circumspect, telling investors growth would be slow to start. Regions’ David Turner pointed to elevated capital-markets refinancing activity in 2025 that had constrained loan growth, calling that headwind largely past.

Bank2025 CRE signal2026 posture
M&T BankCRE portfolio down 1% to $24.1BPace of decline slowing
PNC$328B CRE loan portfolio“Largely stabilized”; moderate growth expected
U.S. BancorpFirst CRE uptick in ~3 yearsGrowth led by multifamily, industrial
Regions Financial2025 refinancing activity constrained growthHeadwind “largely passed”
KeyCorp—Growth expected, but slow at the outset

Bank CFO and CEO commentary from Q4 2025 earnings calls, as reported by CoStar, January 2026.

None of the five banks broke out hospitality separately in this commentary. Their CRE remarks are organized around multifamily, industrial and office — the three sectors that dominate bank CRE books nationally — and hotels are not mentioned by name in any of the available transcripts. That is a real gap in what can be said with confidence: the return-to-lending narrative is documented at the portfolio level, not the hospitality level, and owners should treat the connection between “banks are lending on CRE again” and “banks are lending on hotels again” as an inference rather than a reported fact.

2. The regulatory mechanism, corrected

A common shorthand attributes tighter, smaller construction commitments to the Basel III endgame — the long-running U.S. effort to raise bank capital requirements. That shorthand is imprecise for 2026, and the imprecision matters for how owners should read the year ahead.

The Basel III endgame, as originally proposed in July 2023, would have raised aggregate capital requirements by roughly 16 to 19 percent for the largest banks. That proposal stalled amid industry pushback. On March 19, 2026, the Federal Reserve, OCC and FDIC issued a package of three replacement proposals — a Standardized Approach proposal, a narrower Basel III endgame proposal covering only the largest, most internationally active banks, and a revised G-SIB surcharge proposal. Taken together, industry analysts including PwC and Duane Morris describe the package as delivering net capital relief rather than tightening, a reversal of the 2023 trajectory. The comment period closed June 18, 2026, and the agencies have not set a finalization or implementation timeline, meaning none of this is yet in effect.

The actual, standing source of elevated capital costs on hotel construction lending is older and separate from the endgame debate: the high-volatility commercial real estate rule, which has assigned a 150 percent risk weight — versus 100 percent for standard commercial real estate — to acquisition, development and construction loans since 2015. That rule, not the endgame proposal, is why a construction loan has always tied up more of a bank’s capital than a stabilized-asset loan of the same size, and it is unaffected by the endgame’s reversal toward relief. The March 2026 package does propose folding this rule into a redefined category — High Volatility Acquisition, Development or Construction, or HVADC — and cutting the risk weight to 130 percent. But it would also eliminate an existing exemption for loans where the borrower has already contributed significant equity, which could bring more construction loans under the higher-weighted category even as the weight itself falls. For a developer, the practical result is that construction lending is not positioned to benefit from the broader capital relief the same way a loan against a stabilized, cash-flowing hotel would — and that gap is proposed policy, not yet settled.

This is not a US-specific feature of the rules. The European Union’s CRR III framework, in force since January 1, 2025, applies the same 150 percent risk weight to acquisition, development and construction exposures on commercial property, with relief available only for residential ADC loans meeting specific pre-sale and equity conditions. The UK’s Basel 3.1 package, finalized by the Prudential Regulation Authority in January 2026 and taking effect January 1, 2027, creates a comparable distinct ADC category with risk weights running as high as 150 percent. For international owners and cross-border lenders, the elevated capital cost of construction lending specific to hotels is closer to a structural, near-universal feature of post-2015 bank regulation than a temporary policy stance in any one jurisdiction.

3. Hospitality’s disproportionate share of the maturity wall

The commercial real estate maturity wall is frequently cited at the aggregate level — the Mortgage Bankers Association puts 2026 maturities at $875 billion, or 17 percent of the roughly $5 trillion in outstanding commercial mortgages, while S&P Global Market Intelligence’s separate model, which the agencies cite in different contexts, puts the figure closer to $936 billion. The gap between the two reflects differing methodologies and loan universes, not a disagreement about direction.

What the aggregate figure obscures is that hospitality carries a disproportionate share of that maturity load. According to MBA’s 2025 Commercial Real Estate Survey of Loan Maturity Volumes, 30 percent of outstanding hotel and motel mortgage balances come due in 2026 — the highest share of any major property type, ahead of industrial (23 percent), office (17 percent), healthcare (15 percent) and multifamily (13 percent).

Property typeShare of balances maturing in 2026
Hotel/motel30%
Industrial23%
Office17%
Healthcare15%
Multifamily13%

Source: Mortgage Bankers Association, 2025 Commercial Real Estate Survey of Loan Maturity Volumes.

Hospitality consultancy HVS estimates the hotel sector specifically faces roughly $48 billion in CMBS maturities across 2025 and 2026, of which around $23 billion was originated in 2020–2022 at rates of 3.0 to 4.5 percent. Refinanced today at conventional bank construction and permanent pricing of roughly 6.25 to 7.25 percent, that is closer to a 40 percent increase in carrying cost before any loan-to-value gap is addressed — the arithmetic that determines whether a refinancing pencils, independent of whether a bank is willing to write the loan at all.

Credit performance adds a second layer of caution. Trepp’s CMBS lodging delinquency rate has moved in a volatile band roughly between 5.2 and 6.7 percent through 2025 and into 2026 — well below office, which set a record above 11.7 percent in 2025, but higher and considerably more volatile than industrial, which has held near 1.2 percent. That volatility, combined with hospitality’s outsized maturity share, is consistent with lenders treating the sector with more caution in underwriting than the “CRE is back” headline suggests, even without a single source stating that caution explicitly by name.

4. Where the returning capital is actually landing

Some of that capital is measurably reaching hotels. MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations found hotel property loan originations up 59 percent year over year in the first quarter of 2026, within an overall commercial and multifamily origination rebound of 52 percent. That figure covers all capital sources — banks, life companies, CMBS conduits, agency lenders and private credit combined — not bank lending specifically, so it cannot be read as proof that the five regional banks’ stated return to CRE is what is driving hotel originations higher. It shows only that hotel debt capital overall is more active than a year earlier.

Construction activity presents a genuinely mixed picture, and the different measures should not be read as confirming one another. Lodging Econometrics’ Q2 2026 pipeline data show the U.S. hotel construction pipeline down roughly 4.9 percent in project count year over year, even as the global pipeline reached a record 15,976 projects. Within that declining U.S. total, however, new project announcements were up 18 percent year over year and construction starts were up 14 percent — both leading indicators moving in the opposite direction from the pipeline stock itself. A shrinking pipeline alongside rising starts and announcements is not a contradiction; it reflects a backlog working through to groundbreaking faster than new projects are being added behind it. It is a plausible, but not yet proven, sign that financing access has genuinely eased at the point where projects convert from planned to funded — the Q2 2026 data is too recent to say definitively that bank capital, rather than private credit or improved sponsor economics, is the specific cause.

The Federal Reserve’s July 2026 SLOOS corroborates the direction at the bank level: standards for commercial real estate loans eased on balance in the second quarter of 2026, the strongest easing since early 2022, alongside broadly unchanged demand. The FDIC’s first-quarter 2026 Quarterly Banking Profile shows the industry generating $80.5 billion in net income with strong capital and liquidity, even as past-due and nonaccrual rates for non-owner-occupied commercial real estate and multifamily loans remained above pre-pandemic averages at the end of 2025 — a reminder that industry-level capital strength does not eliminate property-level refinancing risk for any individual borrower.

5. The syndication and private-credit offset

What banks are not doing, according to lenders active in the space, is retaking construction risk onto their own balance sheets at pre-2023 scale. HALL Structured Finance, a private commercial real estate lender active across hotel, multifamily and office construction, wrote in its mid-2026 outlook that banks “remain selective, particularly on construction and transitional lending,” leaving what it called a meaningful gap for private, non-bank lenders able to underwrite complexity and hold a position through a project’s business plan. Several of the returning regional banks, including Regions, maintain dedicated syndication platforms for large commercial real estate transactions — a structural indication that even where banks are willing to lead a hotel construction loan, they are more likely than before 2023 to distribute a share of that exposure to other institutional lenders rather than hold the full commitment.

For an owner, the practical effect is a capital stack that looks different from 2021 even when the headline lender is the same regional bank that financed the last cycle: a smaller loan-to-cost ratio from the bank, a stricter debt-service coverage threshold, and a second or third capital source — private credit, a syndicate partner, or both — filling the gap between what the bank will commit and what the project costs. Conventional bank hotel construction pricing in 2026 runs roughly 6.25 to 7.25 percent for branded select-service and upper-upscale assets, against private construction lending in the 11 to 12.5 percent range for loans banks decline to lead, according to hotel-lending platform data — a gap that determines the blended cost of capital far more than whether a bank shows up at the closing table at all.

6. What to watch

The March 2026 capital proposals remain unfinalized, and the agencies have given no timeline for a final rule or an effective date, meaning the HVADC redefinition — and whether it nets out to easier or harder construction lending once the lost exemption is weighed against the lower risk weight — is not yet settled. Owners with projects in early planning have a real interest in that outcome, given that acquisition, development and construction loans are the one category of commercial real estate lending least likely to benefit from the broader capital relief direction. Bank earnings calls for the fourth quarter of 2026 and first quarter of 2027 are also worth watching for whether any of the five banks begins breaking out hospitality exposure specifically, which would be the first direct evidence — rather than an inference from broader CRE commentary — of how banks are actually treating hotel risk within a recovering commercial real estate book.

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