Colorado Springs Hotel Loans: Hospitality Financing 2026

Why Is Colorado Springs a Growing Market for Hotel Investment?

Colorado Springs sits at the base of Pikes Peak in one of the most visited regions of Colorado, drawing over 23 million visitors annually to attractions including the Garden of the Gods, the U.S. Olympic and Paralympic Museum, Pikes Peak Highway, and the historic Broadmoor resort. For hotel investors and lenders, this combination of leisure tourism, military-driven demand, and corporate travel creates a diversified demand base that supports hotel financing across multiple property types and chain scales.

The Colorado Springs hotel market generated an average daily rate (ADR) of $145.29 and revenue per available room (RevPAR) of $93.96 in 2025, with downtown occupancy registering in the mid-60s. While these metrics reflect modest softening from post-pandemic peaks, the long-term fundamentals remain constructive. The Pikes Peak region's tourism infrastructure continues to expand, the ElevateCOS airport modernization project is approaching completion, and downtown Colorado Springs has experienced significant revitalization with new attractions, restaurants, and event venues.

However, the market is not without challenges. Government travel cuts and per-diem rate reductions have pressured hotels with heavy military and government exposure. New supply, with 791 rooms currently under construction, is expected to outpace demand growth in the near term. For hotel loan applicants in Colorado Springs, understanding these dynamics and positioning your investment thesis accordingly is critical to securing favorable financing.

What Types of Hotel Loans Are Available in Colorado Springs?

Hotel financing in Colorado Springs spans a wide spectrum, from conventional bank loans for select-service properties to complex mezzanine structures for large resort transactions. The appropriate loan type depends on the property's stabilization status, brand affiliation, the borrower's experience, and the investment strategy.

CMBS (conduit) loans are the primary financing vehicle for stabilized, flagged hotels in Colorado Springs. These non-recourse loans offer fixed rates between 6.0% and 7.5% with five to ten-year terms and leverage up to 70% of appraised value. CMBS lenders require strong trailing financial performance, typically at least 12 months of stabilized operations, and evaluate the property's RevPAR index relative to its competitive set.

Bridge and renovation loans serve Colorado Springs hotel investors who need to complete a Property Improvement Plan (PIP), reposition an underperforming property, or stabilize a recently constructed hotel during ramp-up. These loans carry rates between 8.0% and 12.0% with terms of one to three years. Given the current softness in government-dependent hotels near Peterson SFB and the airport, bridge financing for repositioning strategies is particularly relevant in the Colorado Springs market.

SBA 504 and SBA 7(a) loans are available for owner-operated hotels in Colorado Springs. The SBA 504 program offers just 10% down with long-term fixed rates, making it attractive for entrepreneurs opening boutique hotels, bed-and-breakfasts in Manitou Springs, or small independent hotels in the downtown area. The SBA 7(a) program provides more flexibility for working capital and operating needs.

For larger transactions requiring additional leverage, mezzanine financing can fill the gap between senior debt and equity, bringing combined leverage up to 80% to 85% of value.

How Has the Colorado Springs Hotel Market Performed Recently?

The Colorado Springs hotel market has navigated a complex operating environment over the past two years, with diverging trends across different demand segments and submarkets.

Downtown Colorado Springs has shown relative resilience, with occupancy holding in the mid-60s during 2025 despite broader market headwinds. Citywide events including the U.S. Senior Open at Broadmoor Golf Club and the U.S. Synchronized Skating Championships helped offset the decline in government demand. However, these specific events will not return in 2026, creating a gap that the city's ongoing leisure and corporate travel will need to fill.

The government and military travel segment has been the most challenged component of the Colorado Springs hotel market. Federal budget tightening, reduced travel authorizations, and a decrease in per-diem rates of $10 during peak summer months and $5 during the rest of the year have directly impacted hotels near Fort Carson, Peterson SFB, and the airport. ADR in the downtown submarket declined by roughly 1% in 2025 as a result of these pressures.

Despite these near-term challenges, the recovery trajectory remains positive. Occupancy levels in the Colorado Springs market are anticipated to reach the high-60s within the next three years, approaching the pre-pandemic levels achieved from 2017 to 2019. ADR growth is expected to remain modest in the near term due to lower-rated leisure travel and stable per-diem rates, but demand growth should continue its positive trend.

Which Colorado Springs Submarkets Offer the Best Hotel Investment Opportunities?

Colorado Springs offers distinct hotel submarkets, each with unique demand drivers, competitive dynamics, and investment profiles. Understanding these differences is essential for both investors and lenders evaluating hotel financing opportunities.

Downtown Colorado Springs has experienced the most transformation over the past five years, with the U.S. Olympic and Paralympic Museum, Weidner Field (home of the Colorado Springs Switchbacks), and ongoing retail and restaurant development creating a vibrant mixed-use district. Hotels in the downtown core benefit from a diversified demand base that includes leisure tourists, corporate travelers, event attendees, and weekend visitors. The ongoing revitalization suggests upside potential for well-positioned downtown properties.

The Garden of the Gods corridor, stretching from the park entrance toward Manitou Springs, serves the city's largest tourism attraction, which draws over 5 million visitors annually. Hotels in this area experience strong seasonal demand peaks during summer and benefit from the area's scenic appeal. Boutique and lifestyle-branded properties tend to outperform in this submarket.

Manitou Springs, the historic town adjacent to the Pikes Peak Cog Railway terminus and the Cave of the Winds, supports a thriving boutique hotel and bed-and-breakfast market. SBA loans are particularly well-suited for owner-operators in this submarket, where character properties and unique positioning command premium rates.

The airport and Peterson SFB area has been most impacted by government travel reductions. However, this creates potential value-add opportunities for investors willing to reposition government-dependent properties toward a more diversified demand mix. Bridge financing can fund renovation and repositioning while the property transitions to its new market position.

The Broadmoor area represents the luxury end of the Colorado Springs hotel market, with ADR ranging from $300 to over $600. While trophy assets in this segment rarely trade, smaller luxury and resort properties near The Broadmoor benefit from the halo effect of the world-class resort.

What Do Hotel Lenders Look for in Colorado Springs?

Hotel loans are among the most thoroughly underwritten commercial real estate transactions, and Colorado Springs hotel borrowers should be prepared for detailed scrutiny of both property-level and market-level metrics.

Debt service coverage ratio (DSCR) is the primary metric for hotel loan approval. Most lenders require a minimum DSCR of 1.25x, with strong applications showing 1.40x or higher. For Colorado Springs hotels, lenders will evaluate DSCR based on trailing 12-month financials for stabilized properties or on a stabilized pro forma for renovation or construction projects.

Debt yield (NOI divided by loan amount) has become an increasingly important metric for hotel lenders, with minimums typically set at 9% to 11%. This metric provides a more stable assessment of loan risk than LTV, which can fluctuate with cap rate compression or expansion.

RevPAR index, which measures a hotel's RevPAR performance relative to its competitive set, tells lenders whether the property is capturing its fair share of market demand. A RevPAR index above 100 indicates the hotel is outperforming its comp set, while an index below 90 may signal operational issues or competitive disadvantages.

Borrower experience is particularly important in hotel lending. Colorado Springs hotel lenders typically require the borrower or management company to have experience operating at least one similar hotel. For first-time hotel investors in Colorado Springs, partnering with an experienced management company can satisfy this requirement.

To evaluate your Colorado Springs hotel's debt service capacity, use our commercial mortgage calculator to model different financing scenarios.

What Are the Key Tourism Demand Drivers for Colorado Springs Hotels?

The Pikes Peak region's tourism infrastructure is the foundation of leisure demand for Colorado Springs hotels, and this infrastructure continues to expand.

The Garden of the Gods, a free public park featuring dramatic red rock formations, attracts over 5 million visitors annually and is the single largest demand generator for Colorado Springs hotels. The U.S. Olympic and Paralympic Museum, which opened in 2020, adds approximately 500,000 visitors per year and has become a major draw for both leisure tourists and group events.

The Pikes Peak Highway and Cog Railway provide access to the 14,115-foot summit and generate strong seasonal demand from May through October. Manitou Springs' cave tours, historic charm, and restaurants add to the region's appeal.

The ElevateCOS airport expansion project is perhaps the most significant near-term catalyst for Colorado Springs hotel demand. Three of seven planned phases have been completed as of year-end 2025, with all phases expected to finish by May 2026. The modernized airport is designed to attract new airlines and routes, potentially increasing visitor arrivals directly to Colorado Springs rather than routing through Denver International Airport.

For hotel lenders evaluating Colorado Springs properties, the airport expansion represents a credible long-term demand growth story. Properties positioned to capture incremental airlift-driven visitors, particularly in the downtown, Garden of the Gods, and Manitou Springs submarkets, stand to benefit most from this infrastructure investment.

How Does New Hotel Supply Affect Financing in Colorado Springs?

With 791 rooms currently under construction in Colorado Springs, new supply is a critical factor for hotel lenders evaluating loan applications. Lenders will stress-test your property's financial projections against the impact of these new rooms entering the market.

New supply is expected to outpace demand growth over the next year in Colorado Springs, which means occupancy gains will be gradual rather than dramatic. For investors seeking hotel loans, this makes it essential to demonstrate a clear competitive advantage, whether through brand affiliation, location, unique positioning, or a renovation plan that significantly improves the property's market position.

The demand segment mix for Colorado Springs hotels is diversified, with leisure and tourism accounting for approximately 40% of demand, government and military contributing 25%, corporate travel at 20%, group and events at 10%, and extended stay at 5%. Lenders prefer this kind of diversification because it reduces the risk of any single demand segment downturn crippling the property's performance.

For hotel investors considering new construction in Colorado Springs, the current supply pipeline and near-term demand dynamics suggest caution. Renovation and repositioning of existing properties, particularly those impacted by government travel cuts, may offer better risk-adjusted returns than ground-up development during this period.

Explore bridge loan options for hotel renovation projects or learn about acquisition financing for stabilized Colorado Springs hotel properties.

What Does a Hotel Construction Loan Look Like in Colorado Springs?

New hotel construction in Colorado Springs requires specialized financing that accounts for the extended development timeline and the multi-year ramp-up period that hotels typically require to reach stabilized operations.

Construction loans for Colorado Springs hotels generally carry rates between 8.5% and 12.0% with terms of 18 to 36 months and leverage of 60% to 70% of total project cost. The loan is structured as a line of credit with draws tied to construction milestones, and interest accrues only on the drawn balance.

Franchise approval is required before construction loan closing for branded hotels. Major brands including Marriott, Hilton, IHG, and Hyatt each have specific design standards, location requirements, and market impact studies that must be completed before they approve a new franchise. This process can add 60 to 120 days to the pre-construction timeline.

Colorado Springs has specific development requirements that affect hotel construction, including design standards in the downtown overlay district and environmental considerations near the Fountain Creek floodplain. Working with a local development team familiar with El Paso County permitting is essential.

The exit strategy for a hotel construction loan in Colorado Springs typically involves refinancing into permanent financing once the property achieves 12 months of stabilized operations, usually 18 to 36 months after opening. Some developers structure their construction loans with built-in conversion features that allow automatic transition to mini-perm or permanent debt upon stabilization.

For help structuring a hotel construction or renovation loan in Colorado Springs, contact our commercial lending team to discuss your project.

Frequently Asked Questions About Hotel Loans in Colorado Springs

What is the minimum down payment for a hotel loan in Colorado Springs?

Down payment requirements for hotel loans in Colorado Springs range from 10% for SBA 504 owner-operated hotels to 30% to 40% for conventional bank or CMBS loans. Bridge and renovation loans typically require 25% to 35% equity. Hotels are considered higher-risk assets than many other commercial property types, so lenders generally require more equity than for office, retail, or industrial properties.

How long does it take to close a hotel loan in Colorado Springs?

Hotel loans in Colorado Springs typically take 60 to 120 days to close, depending on the loan type and complexity. SBA loans may require 90 to 150 days due to additional government agency review. Flagged hotel transactions require franchise approval, which can add 60 to 120 days to the pre-closing timeline.

Can I use a bridge loan to renovate a Colorado Springs hotel?

Yes, bridge loans are commonly used for hotel renovations and PIP (Property Improvement Plan) compliance in Colorado Springs. Bridge lenders will underwrite based on the property's as-renovated value and stabilized pro forma, with the expectation that you will refinance into permanent debt upon completion. Given the current opportunities to reposition government-impacted hotels in the airport and Peterson SFB areas, bridge financing for renovation is particularly relevant.

What impact do per-diem rate changes have on hotel financing in Colorado Springs?

Per-diem rate changes directly affect the revenue projections for hotels with significant government and military demand in Colorado Springs. The 2024/25 decrease in per-diem rates of $10 during summer and $5 during other months has reduced ADR growth and pressured occupancy. Hotel lenders will evaluate your property's dependence on government per-diem rates and may stress-test your financials using reduced government demand scenarios.

Are boutique hotels eligible for SBA loans in Colorado Springs?

Yes, boutique hotels and bed-and-breakfasts in Colorado Springs are eligible for both SBA 504 and SBA 7(a) loans, provided the borrower operates or manages the property directly and meets the SBA's size standards. Manitou Springs and downtown Colorado Springs both have strong markets for independent boutique hotels. The SBA 504 program's 10% down payment makes it particularly attractive for first-time boutique hotel owners.

How does the ElevateCOS airport expansion affect hotel lending in Colorado Springs?

The ElevateCOS airport expansion, expected to be complete by May 2026, is viewed positively by hotel lenders evaluating Colorado Springs properties. Increased passenger capacity and new airline routes are expected to bring more visitors directly to the Pikes Peak region, supporting long-term hotel demand growth. Properties in the downtown, Garden of the Gods, and Manitou Springs areas are expected to benefit most from increased airlift.