Hotel owners spend sleepless nights trying to get the best hospitality loans in the market. If you are such an owner, you might risk being out of business because you cannot keep up with the expenses during off-peak season.
It pays to know the factors lenders look at before approving you for a loan. Here are some of them:
Flagged vs. Unflagged Hotels
Tourists tend to prefer visiting flagged hotels over unflagged ones. The reason behind this preference is because flagged hotels belong to a national franchise, which means guests already know the particular brand and quality of service.
Consequently, this convinces lenders that they will be making a wise investment. Such hotels, therefore, get better terms and appraisals than unflagged hotels.
Aim at building a strong hotel brand and diversifying your influence in the hospitality industry so as to secure the best loans.
The Hotel Management
Another key factor to getting the best loan terms is the hotel management. In some cases, the borrower is an inexperienced hotel manager. Lenders may shy away from offering them the coveted loans for restaurants even if the hotel has high returns.
This is because lenders believe that an inexperienced manager is bound to make mistakes, putting their investment at risk. If you want to secure a good loan, therefore, hire an experienced hotel manager.
The Value of the Hotel
Lenders require that you reflect the value of your hotel on paper. This makes it easier to determine the appropriate loan terms for your hotel. You should forward income statements, balance sheets, tax returns, and other related documents to the lenders so that they have proof of the worth of your hotel. A higher hotel value means a better loan term.
It is wise to have a certified public accountant review the statements to ensure that everything is in order.
These tips will help you get a loan, which means you can easily survive through the off-peak season and get ahead of the competition.