How deep should a hotel hold sit in reserves before the reserve itself kills the reason you bought it

Reading a sponsor's reserve policy and it says three months of debt service plus the lender's FF&E escrow at 4% of gross. That struck me as thin, so I went looking for what thick would be, and then I ran the arithmetic on what thick costs.

On a hypothetical 100-key select service with $8M of gross revenue and $1.1M of annual debt service, three months of debt service is $275k sitting idle. Twelve months is $1.1M. Add a properly accrued PIP at $25k a key and you're carrying $2.5M against a $6M equity raise, which means a meaningful share of the money investors sent is in a bank account rather than in an asset. If the projected distribution is 6%, that reserve is costing the deal roughly a point and a half of yield in exchange for surviving a bad year without a suspension.

The argument for deep reserves is that hotels reprice nightly and a single soft summer can take NOI below debt service, and that the worst outcome for a passive investor isn't a low distribution, it's a forced sale or a capital call in a market that isn't buying.

The argument against is that reserves are the sponsor's cheapest way to look prudent while collecting fees on capital that isn't working, and that a lender escrow plus available credit does the same job without the drag. Some would say if you need twelve months of debt service in cash, the debt was sized wrong to begin with.

I can't decide whether I'd rather see 6% projected with three months of cushion or 4.5% projected with a year of it.