How to Finance a Cambria Hotels Franchise: Upscale Development
By Marc Cornella
A Cambria Hotels franchise loan usually finances a new upscale hotel from the ground up, or the adaptive reuse of an existing building, rather than a simple purchase. Cambria sits at the top of its franchisor’s select service lineup, so projects tend to be larger, more design-driven and more often located in dense urban and mixed-use settings than typical franchised hotels.
This article explains what the franchisor discloses publicly about Cambria, how its fee structure flows into a lender’s cash flow analysis, what the brand’s SBA Franchise Directory listing and management agreement note mean, and how developers and buyers typically combine construction, permanent and equipment financing.
US Professional Funding is not affiliated with, sponsored by or endorsed by Cambria Hotels or Choice Hotels International; the name is used only to describe the business. Figures from the franchisor’s disclosure document and annual report can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Cambria Hotels Franchise Loan at a Glance
- Franchisor: Choice Hotels International, headquartered in North Bethesda, Maryland.
- Positioning: a select service brand in the upscale chain scale, according to the franchisor’s annual report.
- System size: 76 hotels with 10,189 rooms at December 31, 2025, all in the United States.
- Royalty: the annual report says royalties under U.S. franchise agreements typically range from 5% to 6% of gross room revenues across the franchisor’s brands.
- Marketing and reservation fees: typically 3% to 4% of gross room revenues, per the same report.
- Franchise term: U.S. franchise agreements generally run 10 to 30 years.
- Initial fees and investment: disclosed in Items 5 through 7 of the current FDD, not in the franchisor’s public filings.
- SBA Franchise Directory: listed as Cambria Hotels (code S0336), with a management agreement note explained below.
What Is Cambria Hotels?
Cambria Hotels is the upscale select service brand of Choice Hotels International. The franchisor’s annual report describes the brand as targeting top primary-market locations as well as secondary markets with strong business and leisure demand.
The franchisor reported 76 Cambria hotels with 10,189 rooms at the end of 2025, every one of them in the United States. That works out to larger average properties than many select service brands, which matters for financing: bigger hotels mean bigger loans, longer construction periods and more weight on market studies.
Design and guest experience. The franchisor describes Cambria hotels as stylish yet approachable, with design inspired by each location, spacious rooms, flexible meeting space and locally inspired food and beverage, including craft beer. Some Cambria hotels occupy repurposed historic buildings, while others are new construction in downtown and mixed-use developments.
The franchisor as investor. Cambria is unusual because its franchisor has a direct financial stake in the brand’s growth. The annual report says the company’s hotel development and ownership efforts focus primarily on Cambria, that it owned 17 hotels at year-end 2025, of which 10 were Cambria hotels, and that it offers a program of investment, financing and guaranty support to qualified franchisees, generally expecting to recycle that capital within five years.
How lenders see the brand. Lenders see a younger, smaller system than the franchisor’s midscale brands, positioned in markets with higher land and construction costs. They also see a franchisor that participates directly in development. That combination can make a Cambria project easier to capitalize, but it means the underwriting focuses on the market, the developer’s track record and how any franchisor participation is structured.
Cambria Hotels Franchise Costs
Initial franchise fee. The franchisor’s annual report describes franchise fees in three parts: an affiliation fee, a royalty fee and a marketing and reservation fee. The Cambria affiliation fee, any per-room component and any application fee appear in Item 5 of the current FDD, which the franchisor provides to prospective developers.
Land and construction. For a new-build Cambria, land and construction are the largest costs by far. Urban sites can bring structured parking, mixed-use requirements and longer entitlement periods. Adaptive reuse projects trade some ground-up costs for structural work, code upgrades and historic preservation requirements.
Furniture, fixtures and equipment (FF&E). An upscale select service hotel needs guest room furniture, bedding, lighting, a lobby bar and food and beverage equipment, fitness center equipment, meeting room furnishings, technology systems and signage that meet brand standards.
Opening costs and working capital. Pre-opening payroll, training, opening inventory, marketing, insurance, deposits and an operating reserve to carry the hotel through ramp-up.
Total investment. The Item 7 table in the current FDD gives the estimated initial investment range and its line items. Because the franchisor does not publish those figures in its public filings, ask for the FDD early and expect line items to include:
- The affiliation or initial franchise fee
- Land acquisition or ground lease costs
- Site work and building construction
- Architecture, engineering, permits and impact fees
- FF&E, including food and beverage equipment
- Technology, reservation and property management systems
- Signage
- Pre-opening expenses and training
- Opening inventory and supplies
- Additional funds for the initial operating period
A lender will compare the developer’s own budget, based on actual site, construction bids and design, with the Item 7 range.
Ongoing Fees and How They Affect Your Loan
Royalty. The franchisor’s annual report states that royalties under its U.S. franchise agreements typically range from 5% to 6% of gross room revenues. Item 6 of the Cambria FDD gives the brand’s actual rate and any ramp schedule.
Marketing and reservation fees. These typically range from 3% to 4% of gross room revenues, according to the same report, and fund system marketing and central reservations.
Other fees. Expect Item 6 to list loyalty program charges, technology and system fees, training and transfer fees, among others.
Renovation and quality standards. Over a long franchise term, brand standards change, and owners may need to renovate or update to keep the flag. Our article on financing a property improvement plan covers how owners pay for required upgrades.
How lenders factor these in. Lenders build a pro forma from projected occupancy and average daily rate, subtract room-revenue-based franchise fees, management fees, payroll, food and beverage costs, utilities and a reserve for replacements, then test whether the remaining net operating income covers debt service. For a new hotel, they also model the stabilization period.
Franchisor Requirements for New Owners
The franchisor does not publish a net worth or liquidity minimum for Cambria developers in the public materials we could verify. In practice, the scale of an upscale new-build project means developers need substantial equity, hotel development experience or an experienced partner, and a management plan the franchisor accepts.
The approval process. A developer typically presents a specific site, the franchisor evaluates the market and the project, and approval leads to a franchise agreement with development milestones. Design review follows, with the brand’s standards governing the building, interiors and amenities. Lenders usually want that approval in hand, or close to it, before committing.
Ways to Own a Cambria
New construction. Most Cambria growth comes from new development. Financing usually starts with a construction loan that converts to, or is refinanced by, permanent financing once the hotel stabilizes. Our hotel start-up financing page covers how these projects are structured.
Adaptive reuse and conversions. Converting a historic or underused building can secure a site that would be hard to replicate, but it brings structural, code and preservation risks that lenders price into the budget and contingency.
Buying an existing Cambria. As the brand matures, some hotels change hands. A buyer gets operating history, but the franchisor must approve the new owner, and a new franchise agreement or property improvement plan may be required. See our hotel acquisition financing options.
Multi-unit development. Developers with several sites may negotiate multiple agreements with the franchisor, financing each hotel separately as it moves through entitlement and construction.
Financing Options for a Cambria Hotels Franchise
SBA 7(a) loans. Because Cambria is on the SBA Franchise Directory, an SBA 7(a) loan can be part of the capital stack for an owner-operated project, subject to program rules and size limits. Many upscale projects exceed what a single 7(a) loan can cover.
SBA 504 loans. An SBA 504 loan is built for owner-occupied real estate and long-lived fixed assets, and hotels are a common fit. It can finance land, construction and some FF&E for a qualifying project.
Conventional construction and permanent loans. Larger Cambria projects frequently use a conventional business loan structure: a construction loan sized to the budget and the borrower’s equity, followed by permanent financing sized to the stabilized hotel’s cash flow.
Equipment financing. FF&E packages, kitchen and bar equipment, fitness equipment and technology systems can be financed separately, preserving equity for construction.
Working capital and lines of credit. A new hotel needs cash for pre-opening payroll, marketing and the months before occupancy stabilizes. See our hotel working capital options.
Franchisor participation. The franchisor’s program of investment, financing and guaranty support can reduce the equity or debt a developer must raise elsewhere. Any franchisor capital must be coordinated with the senior lender, and it can affect SBA eligibility, as explained below. Our article comparing franchisor financing with SBA and bank loans explains how to weigh these offers.
Seller financing on resales. On an existing hotel, a seller may carry part of the price. A seller note would need to be acceptable to the senior lender and is typically subordinate to it, and SBA rules may limit its terms.
SBA Loans for Cambria Hotels Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, which lists brands whose franchise agreements have been reviewed for eligibility. SBA lenders generally require a listing before making an SBA-guaranteed loan to a franchisee, but a listing does not approve any borrower.
Cambria’s listing. Cambria Hotels appears under code S0336 with this note: “If Applicant also operates under a management agreement with a third party, Lender/CDC must review the management agreement in accordance with SOP 50 10 to determine if there is affiliation between the Applicant and the management company. The Applicant is not eligible if the management company is, or is affiliated with, the franchisor.”
What it means in plain English. Many hotel owners hire a management company to run the property. If you do, the SBA lender or certified development company must read that management agreement under the SBA’s standard operating procedures to decide whether the manager controls the business enough to be treated as affiliated with you. The second sentence is a hard stop: if the hotel would be managed by the franchisor or a company affiliated with it, the owner cannot get SBA financing. Because the franchisor also earns management fees from hotels it manages, a Cambria owner seeking SBA financing should choose an independent management company or self-manage.
Franchisor capital and SBA. If the franchisor invests equity or lends to the project, the SBA lender will need to review that relationship as well. Raise any franchisor participation with your lender at the start.
Application tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Our guide to SBA loans for hotels covers how 7(a) and 504 work for lodging, and our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Cambria Deal
Personal credit and financial history. Lenders review credit, tax returns and personal financial statements, and principals typically guarantee the loan.
Net worth and liquidity. Equity for a new-build upscale hotel is substantial, and lenders want liquidity that remains after closing to cover cost overruns and the ramp-up.
Hotel development and management experience. Lenders give heavy weight to completed hotel projects and to the management company’s record with upscale properties.
Business plan and projections. Lenders expect an independent feasibility study with occupancy, average daily rate and food and beverage assumptions for the specific market, plus a stabilization timeline.
The FDD and franchise agreement. Lenders review Items 5, 6, 7, 10, 17 and 19, the term, termination provisions, any liquidated damages and the comfort letter the franchisor provides to the lender.
Site, construction and real estate. Expect appraisal, environmental review, construction contracts, a budget with contingency, entitlement status and, for a ground lease, its term and lender protections.
Historical financials for resales. Buyers of operating hotels provide several years of profit and loss statements and monthly operating reports.
FF&E, Food and Beverage and Renovation
Cambria’s upscale positioning shows up in its FF&E budget. Lobbies are designed as gathering spaces, food and beverage service is part of the guest experience, and meeting space must be flexible. These items wear out on their own schedule, so lenders typically require a reserve for replacements in the pro forma.
Over a long franchise term, expect periodic renovation. Building those future costs into the original financing plan avoids an equity call later.
Multi-Unit Growth and Development Agreements
A developer with a successful first Cambria may pursue a second site in another market. Lenders will look at the first hotel’s stabilized performance, the developer’s balance sheet across both projects and whether equity is available for the next one.
As a portfolio grows, owners often consolidate debt or refinance stabilized hotels to fund new ones. Our article on hotel portfolio financing explains these options.
Real-World Scenarios
A developer building downtown. An experienced hotel developer secures a downtown site, signs a Cambria agreement and finances construction with a conventional construction loan that later converts to permanent debt.
An owner-operator using SBA 504. A smaller owner-operator with an independent management company uses an SBA 504 loan for a secondary-market Cambria, confirming the management agreement does not create affiliation.
A project with franchisor capital. A developer accepts franchisor investment support. The senior lender reviews the terms, and the developer chooses conventional financing because the structure does not fit SBA rules.
A buyer acquiring a stabilized hotel. A buyer purchases an operating Cambria, receives franchisor approval and finances the purchase with a Cambria Hotels franchise loan sized to the hotel’s actual net operating income.
Common Mistakes to Avoid
- Choosing a franchisor-affiliated management company and then applying for SBA financing
- Relying on public fee ranges instead of the Cambria FDD’s Items 5 through 7
- Underestimating entitlement time and construction contingency on urban sites
- Leaving too little working capital for the stabilization period
- Ignoring future renovation costs over a long franchise term
- Accepting franchisor capital without coordinating with the senior lender
For more pitfalls, read the hotel loan mistakes that cost owners the most.
Next Steps to Finance Your Cambria Hotels Franchise
Step 1: Request the FDD. Get the current Cambria FDD and review Items 5, 6, 7, 10, 17 and 19 with counsel.
Step 2: Secure and study the site. Commission a feasibility study and confirm zoning and entitlement paths.
Step 3: Choose a management approach. Decide between self-management and an independent manager, keeping the SBA note in mind.
Step 4: Talk with a financing specialist. Discuss how a Cambria Hotels franchise loan would be structured before you commit to land or design.
Step 5: Build the budget and pro forma. Combine construction bids, FF&E quotes and franchise fees into one budget with contingency.
Step 6: Apply and coordinate approvals. Align the franchise agreement, lender commitment and any franchisor capital.
Step 7: Close and open. Fund pre-opening costs and working capital and track the ramp-up.
Cambria Hotels Franchise Loan FAQs
How much does it cost to build a Cambria hotel?
The franchisor discloses the estimated initial investment in Item 7 of its FDD. Costs depend heavily on land, location, building size and whether the project is new construction or adaptive reuse.
What royalty does Cambria charge?
The franchisor’s annual report says U.S. royalties typically range from 5% to 6% of gross room revenues, with marketing and reservation fees typically 3% to 4%. The Cambria FDD’s Item 6 gives the brand’s actual rates.
How many Cambria hotels are there?
The franchisor reported 76 Cambria hotels with 10,189 rooms at December 31, 2025.
Is Cambria eligible for SBA loans?
Yes. Cambria Hotels is on the SBA Franchise Directory under code S0336. The owner is not eligible if the hotel’s management company is, or is affiliated with, the franchisor.
Does the franchisor offer financing?
The annual report describes a program of investment, financing and guaranty support for qualified franchisees. Review Item 10 of the FDD for specifics.
How long is a Cambria franchise term?
The franchisor says its U.S. franchise agreements generally run 10 to 30 years. Check the Cambria FDD for the term offered.
Can I finance FF&E separately?
Yes. Furniture, kitchen and bar equipment, fitness equipment and technology can be financed apart from the real estate loan.
Can I buy an existing Cambria?
Yes, with franchisor approval. Lenders underwrite the hotel’s actual results and any required improvements.
Can a first-time hotel owner get a Cambria Hotels franchise loan?
It is harder for an upscale new build. First-time owners usually partner with experienced developers or hire an experienced management company.
What documents will a lender need?
Financial statements, tax returns, a feasibility study, construction budget and contracts, the franchise agreement, the management agreement and appraisal.
Does the FDD include financial performance information?
Review Item 19 of the current Cambria FDD to see what financial performance representations it includes.
Final Thoughts
Financing a Cambria is a development exercise as much as a franchise purchase. Developers who study the FDD early, choose a management structure that fits their financing, build realistic contingencies and coordinate any franchisor capital with their lenders put their projects on solid footing.
US Professional Funding helps hotel owners and developers finance construction, acquisitions, renovations and working capital for franchised properties. Learn more about our franchise financing and hotel and motel financing solutions.
