NEW YORK CITY, New York: Due to tighter lending standards from regional banks, US hotel developers are finding it more difficult to secure funding, slowing the construction of new hotels.

Reuters reported that hotel developers, private equity firms and general contractors are being affected by the financial stress felt by regional banks, the largest lenders to hotels and other commercial real estate markets, forcing developers to postpone projects or find methods for raising capital.

The situation highlights the impact of the recent regional banking crisis on the wider US economy, which caused the failure of three mid-sized US lenders and deposits to be moved to larger banks.

After the collapse of Silicon Valley Bank in March, California developer Shopoff Realty Investments postponed the construction of Dream Las Vegas, a 21-story hotel and casino resort. The firm said it is trying to find alternative financing.

Reuters reported specialist subscription-based research and analytics firm Build Central as stating that since March, 59 of 98 US hotel projects that broke ground or were in the pre-construction phase this year have been postponed.

Meanwhile, Joseph Delli Santi of Chief Investment Officer at MCR Hotels, the third-largest owner-operator of US hotel brands, including Hilton, said,

"The regional banks that used to be active for us 9 to 12 months ago are not showing up to finance hotels for us today," as quoted by Reuters.

The profits of blue-chip manufacturers, such as Caterpillar, whose commercial real estate customers account for some 75 percent of construction sales, will also be limited by slower hotel development.

Many regional lenders began reducing their exposure to commercial real estate after the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank, through tightening lending standards and offering fewer loans.

Andy Ingraham, hotel developer and president of the National Association of Black Hotel Owners, Operators and Developers, said that as lending criteria became more strict, smaller hoteliers without existing lending relationships began to face difficulties.

Mitchell Hochberg, president of Lightstone Group, a New York-based private real estate investor and hotel developer, said that higher interest rates and inflated raw material costs caused supply chain issues which were already hurting hotel developers, even before the regional banking crisis.

The firm has since postponed new projects.