A comfort letter is a document typically issued by an outside, independent accounting or auditing company, that the financial statements of an organization are accurate.
Comfort letters usually come with a prospectus to be filed for an investment offering (often — as part of the initial public offering). Also, comfort letters can be issued by a parent company assuring the recipient that the subsidiary is a viable business.
Comfort letters shouldn’t be seen as guarantees, commitments, or forecasts for future financial performance as they only reflect the current state.
In the hospitality industry, a hotel comfort letter refers to the franchising business model and is issued as an assurance that the lender can continue with the hotel brand and manage a property if the purchaser (or franchisee) defaults on the loan.