Aareal Bank's Michelle Weiss discusses hotel financing at IHIF

Hotel financing is fluid by nature but has been rocked and swayed of recent by a hike in interest rates. In July, the European Central Bank's Governing Council raised interest rates for the first time in 11 years and more increases are likely in the coming months.

Why did the ECB raise interest rates? Quite simply, the economy is overheated with inflation running rampant. The ECB said, "It is our mandate to keep prices stable. When prices in our economy are rising too fast – that is, when inflation is too high – increasing interest rates helps us bring inflation back down to our 2 percent target over the medium term.

During IHIF 2022, Michelle Weiss, head of hotel properties at Aareal Bank, spoke with Hospitality Insights about hotel lending, especially in the age of COVID and how that has impacted the travel industry. In her estimation, it hasn't.

"It has not changed our view on hotels," she said. "We are very committed in the hotel industry. We have a €10 billion book or a third of our portfolio are hotels. So the bank is very much committed. What has changed is our underwriting; we're looking at it on a more conservative basis. But we remain committed to the hotel industry."

For more of her conversation at IHIF, click on the video above.