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For mid‑market sponsors, capital is still available, but the bar is higher. Lenders and private credit are laser‑focused on five areas: absorption, pre‑leasing, cost overrun protection, equity (25–35%), and sponsor strength, with Canada adding a decisive sixth: CMHC program eligibility.

The paradox of 2025 is that hotel financing is both more competitive and more available than in recent years. But this availability is conditional. Projects that demonstrate strong fundamentals, disciplined budgeting, thoughtful operator selection and comprehensive feasibility analysis are attracting more interest than ever.

If 2024 was a year of adjustment and 2025 is a year of selective growth, 2026 is shaping up to be a sorting mechanism: the projects and platforms that are genuinely aligned with the new rules of the game will scale rapidly; the rest will struggle for attention.

Project founders and developers seeking to participate in middle-market deals face the challenge of demonstrating meaningful equity contribution while potentially lacking substantial cash resources. The financing landscape offers several creative structures to address equity shortfalls and enable founder participation without compromising project viability.

Mezzanine financing provides a pivotal middle ground between debt and equity, offering developers a novel solution to fund their projects.