There are a variety of public debt instruments that can be employed to
encourage hotel development. Among these are debt secured by one or
more specific taxes, revenue bonds, and general obligation bonds. These
categories are further described below. In certain circumstances parts of these
developments can qualify for tax exempt municipal bond status which means
their interest is exempt from state and/or federal income tax so investors,
particularly those in high tax brackets, are willing to accept lower returns
on these securities. All of these can be combined with credit enhancement
strategies that further lower interest rates.