What Boutique Hotel Sponsors Need to Know About Today’s Financing Market

By David A. Sudeck —

Blank Rome was proud to serve as a sponsor of the 2026 Boutique Hotel Investment Conference, one of the premier gatherings for professionals focused on the boutique and lifestyle hotel sector. The firm featured three speakers at this year’s event, underscoring our deep commitment to thought leadership and client engagement in the hospitality space. As my colleague Mark Adams details in his companion post on this blog, the conference brought together owners, developers, operators, and capital providers for candid discussions on the forces driving boutique hotel investment—from evolving guest expectations to creative capital solutions.

I had the privilege of moderating a panel titled “Debt and Equity Investment for Boutique Hotels,” alongside an outstanding group of capital markets professionals: Joe LeVine (Co-Founder & Managing Partner, Mercer Street Partners), Spenser Apramian (VP Investments, Bridgeton), and Laura Rapaport (Founder & CEO, North Bridge). Drawing on decades of collective experience, we explored how boutique hotel sponsors are navigating today’s lending environment and assembling creative capital stacks. Having spent 30 years in hotel-focused practice—and having watched the capital markets landscape shift dramatically—this is a conversation I find endlessly fascinating. Below are the key takeaways from our discussion.

1. Food & Beverage Is Now a Revenue Driver, Not a Cost Center

Food and beverage has always been the topic that draws the most energy from owners and developers, and our panel was no exception. Joe LeVine put it memorably: 20 to 25 years ago, he recalls managing a hotel in New York City where the team did everything it could to suppress F&B sales because every dollar earned actually lost money. The hotel had a small restaurant tucked in the back of the lobby—no windows, no ambiance—because it was required by the brand, not because anyone believed it could drive value.

That paradigm has completely shifted. Today, robust F&B programming—curated restaurant concepts, event venues, lifestyle-driven dining—actively drives room rate and occupancy. As Joe explained, if you can take that revenue stream and actually make money on it, that is your differentiating factor. His firm’s recent acquisition of Bedford Post, where 80 percent of revenue is F&B revenue, is a case in point: the deal got financed because the operator brought a transparent track record and consistent historical data. Still, lenders remain skeptical of F&B revenue projections flowing into net operating income. The consensus from our panelists was clear: operator track record and consistent historical performance data are the keys to securing lender confidence.

2. CPACE Financing Has Become a Major Capital Stack Component

Commercial Property Assessed Clean Energy (“CPACE”) financing has emerged as one of the most powerful tools available to boutique hotel sponsors, and this is something I’ve watched evolve firsthand. I was one of the earliest adopters; my first CPACE deal was back in 2012, when few people in hospitality had even heard of the product. Now available in 40 states, CPACE provides fixed-rate, non-recourse, covenant-light capital that can fund up to 40 percent of total project cost for new construction and up to 100 percent of hard and soft renovation costs.

The market has exploded: the industry completed over $3 billion in CPACE transactions in the last year alone, compared to $3 billion total across 3,000 deals between 2012 and 2020. Because CPACE is structured as a property assessment rather than a mortgage, it transfers with the property, making it especially attractive for sponsors planning medium-term holds. For lawyers like me, it creates a fun capital stack to structure, and for sponsors, it creates real competitive advantage.

3. Creative Capital Stacks Can Achieve 80–85 Percent Leverage

You have to get creative. That was the recurring message from our panelists, and its advice I give my own clients constantly. Sophisticated sponsors are layering multiple financing sources—CPACE, EB-5 immigration-based financing, USDA rural development loans, SBA 504 programs, historical tax credits, and tax increment advances—to achieve leverage ratios of 80 to 85 percent. As Laura Rapaport explained, CPACE’s flexibility is a big reason these stacks work: because it is structured as a property assessment funded by private capital, it can sit alongside virtually every other financing component in the stack. EB-5 rural designations, in particular, supercharge your deal through visa set-asides and priority processing.

I have seen this work in practice. In one project in Paso Robles, for example, we combined CPACE with USDA financing to assemble a capital stack that would have been impossible with conventional lending alone. Similarly, membership initiation fees and residential sales components can fill equity buckets in mixed-use hospitality projects. The takeaway is clear: sponsors who invest the time in structuring creative capital stacks gain a meaningful competitive edge over those relying solely on traditional bank debt.

4. Lender Relationships Are Strategic Assets

A recurring theme throughout our panel was the critical importance of treating lenders as partners rather than adversaries. Transparency is everything. As our panelists put it: “good news is good, bad news is good, no news is bad.” That kind of openness builds trust that translates into tangible benefits: greater leeway for loan modifications, smoother workouts, and future deal flow.

Regional and community bank relationships, in particular, can unlock opportunities that larger institutional or CMBS lenders simply cannot provide. Several panelists shared examples where a lender in one project directly introduced them to their next opportunity. Spenser Apramian made a point that resonated with the room: many lenders will not take on a smaller boutique deal because the workload is the same as a much larger transaction, but the relationships you build over time change that calculus. As he put it, you can accrue a book with a lender that ultimately makes the smaller deals possible. In 30 years of practice, I have seen this dynamic play out time and again. The sponsors who invest in genuine lender relationships are the ones who consistently find capital when others cannot.

5. Boutique Hotels Face Unique Financing Challenges—and Solutions

Our panelists acknowledged what many in this room already know: boutique hotels present distinct financing hurdles. Many lenders are reluctant to underwrite smaller loans in the $10–20 million range because the due diligence workload is comparable to much larger transactions. Counterintuitively, loans under $20 million are more likely to require personal recourse guarantees.

The antidote, again, is relationships. Operators who build track records with specific lenders over multiple transactions can overcome the small-deal barrier. And CPACE’s flexibility at any deal size makes it an especially valuable financing component for smaller boutique projects where traditional capital sources fall short. This is exactly why I’ve made financing such a central part of my practice—securing debt and equity for hospitality assets has never been more challenging, or more rewarding when you get the structure right.

For a deeper dive into these topics, I encourage you to watch the full panel recording: Debt and Equity Investment for Boutique Hotels – Full Panel Video.

This is just the beginning. Hospitality Industry Insights will continue to bring you analysis, commentary, and practical guidance on the issues that matter most to hospitality professionals. I invite you to follow the blog and reach out to any member of Blank Rome’s Hospitality team with topics you’d like us to explore.