A major player in U.S. hotel construction wants to kick its development pipeline up a notch.
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IHG Hotels & Resorts partnered with investment platform Avana Cos. for a $250M co-lending construction program that will accelerate development for the hospitality juggernaut.
The program will provide loans to owners and developers looking to convert or construct hotels under select IHG brands, according to a press release.
"This collaboration with IHG creates a powerful financing solution for hotel owners in today's challenging hospitality landscape," Avana CEO Sundip Patel said in a statement. "Our institutional investment partners and this co-lending program with IHG amplify our ability to provide crucial financing, driving economic growth and creating jobs in communities across the U.S."
As traditional lenders have made it increasingly difficult for developers to qualify for financing, the program is designed to be a borrower-friendly alternative for projects in IHG’s Holiday Inn, Atwell Suites, Avid Hotels and Even Hotels brands.
The company’s U.S. pipeline of nearly 950 hotels makes up almost half of its planned projects around the globe. The co-lending program will accelerate development timelines for IHG’s growth.
IHG added 54 new U.S. hotels, most in its Essentials and Suites brands, during the third quarter of last year.
Speaking with Bisnow earlier this month prior to the program announcement, Patel said IHG expects to spend at least $250M on projects in 2025.
“The recovery from the Covid, obviously, has presented an opportunity,” Patel told Bisnow.
Hospitality brands are benefiting from the return-to-office push as companies forgo Zoom in favor of in-person meetings, he said. As business travelers become more prominent, hotel brands are pushing for modernization.
“Private credit is going to be instrumental over the next year in this space,” Patel said to Bisnow. “Irrespective of where the rates are [in 2025], the activity will be more towards private credit than it will be towards banks and credit unions.”
Avana has funded $1B in loans to minority entrepreneurs, and two-thirds of the company’s small business customers are people of color, according to the release.
“The recent easing of inflation and long-term interest rates are driving owner and developer confidence,” IHG Director of Capital Investments and Transactions Lori Tirado-Celniker said in a statement. “We look forward to working with Avana to deliver an attractive financial alternative and ultimately help owners introduce new brands and standout properties to a wide range of Americas markets.”
After U.S. hotel construction set a record for the number of new projects in the pipeline at the end of 2023, the industry broke that record in 2024, according to a new report from Lodging Econometrics.
The nearly 6,400 projects in the pipeline represented a year-over-year growth of 7%, while number of rooms grew 8% during that time.
Jarred Schenke contributed to this story.
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