Hotel Tech-in is our regular feature that takes a closer look at emerging technology in the hospitality industry.
For hotel owners and developers, securing a commercial loan is rarely easy. But for small- and mid-sized developers, finding capital is even harder.
Charlotte, North Carolina-based Bridge, a digital platform designed to optimize the process of accessing capital, hopes to address this. During this year’s Americas Lodging Investment Summit in Los Angeles, the firm unveiled a new artificial intelligence-powered capability intended to save time and effort for hotel developers — small- and mid-size, specifically — applying for loans.
“We've been building this [platform] for years,” said CEO Rohit Mathur in an interview with Hotel Dive. “Really the basis was, I was a banker for these large corporates, and I was like, why can't we do this for small- or medium-sized businesses?”
Hotel Dive spoke to Mathur about the unique lending challenges facing small- and mid-size hotel developers, and how exactly Bridge plans to address them.
The need for capital
According to Mathur, the hotel industry has unique lending needs.
“There’s about 25,000 hotels in the U.S., and a majority of those aren’t owned by an institutional developer,” he said. Rather, many of those properties are owned by small- or mid-sized developers, which Mathur classifies as any portfolio with less than 15 hotels.
“If you're a developer that has 10 or 15 hotels, you're not going to have a capital markets team, because you may do one or two deals a year,” he said. “Even if you have a portfolio of $150 million, you have the same challenges a lot of times that someone who's just got that third or fourth hotel.”
“I think you’ll start seeing technology play a larger role in these processes, and how we can make things faster and make decisions more quickly.”
Rohit Mathur
CEO, Bridge
Mathur said the need for more digitized capital solutions has been spurred in part by the pandemic, which changed the commercial real estate lending landscape.
“Until two or three years ago, people always went back to the same source for capital,” he said, adding, “That same lender may not be lending anymore.”
A new tool
Bridge’s platform presents developers with multiple lenders who are actively lending. At ALIS’ Tech Challenge, the firm presented a digital offering memorandum tool intended to speed up the time it takes developers to get their loan applications ready.
The tool tackles a key part of the commercial lending process: the offering memorandum, essentially a “memo about the project,” according to Mathur. Developers often spend significant time and effort and up to $20,000 on the document, according to Bridge.
Now, the platform uses AI to simplify the document’s creation. Developers only need to upload two documents to the platform, and once completed, the offering memorandum can be shared directly with Bridge’s network of lenders.
“The advantage of AI is we have fed the algorithm exactly what we want it to look for,” Mathur said. The technology is then able to create a document about the commercial possibilities of the property by searching automatically for demand drivers in the hotel’s neighborhood.
Hotel developers can then check the automatically generated draft and make edits if they wish, Mathur added.
“There's no 100% perfect product yet, but getting to that version one is now a matter of minutes,” he said.
Mathur also noted that the lending space is still surprisingly manual, and Bridge is able to digitize the entire process.
“People are going and punching in numbers, and then they're looking at what the results are, printing it out and sending it to a lender,” he said. “Right now we do that automatically.”
A win-win
Bridge’s offering is gaining traction among hotel companies. The platform already has a partnership with Hilton, and Tuesday, Bridge announced another partnership with Choice Hotels International.
Interested Choice hoteliers are now able to use the platform to seek capital, as well as use the offering memorandum tool — “a win-win for Choice and its hotel owners,” according Dominic Dragisich, executive vice president of operations for Choice, in a statement.
Meanwhile, Mathur believes more digitization is coming for commercial lending — not just in the hotel industry.
“I think you'll start seeing technology play a larger role in these processes, and how we can make things faster and make decisions more quickly,” he said.
