The Key Factors that Need To be Considered When It Comes To Hotel Financing
Hotel financing, unlike other types of business financing, has a lot of key issues that need to be considered before it can be undertaken, to ensure the smooth running of the process, and to minimize conflicts that might come up during the process. Therefore, in such a case, it is advised that both the lender and the borrower be aware of some of these key issues so that a smooth process can be ensured. Some of these key issues that need to be considered have been discussed below and they can enable one to understand the details even better.
The first very important factor that one needs to consider is the classification of the hotel, especially so for the lender. There are two classifications that stand out among the many classifications of hotels that exist and these are the flagged and the non-flagged hotels. The flagged hotels are mainly the hotels that are grouped as one under a brand name. More often than not, these hotels would come across as branches of one hotel, even though sometimes they are quite different and would only share a brand name as the marketing factor. For any client who has used a hotel in the same chain before, they would feel some sort of familiarity with any other hotel in the same chain and would more likely choose that hotel over a completely different one, hence is a very effective marketing strategy. Non-flagged hotels, on the other hand, are those hotels that are more independent, and are more often than not, family owned. Competition between the flagged and the non-flagged hotels are usually on the basis of the amenities available and the quality of the services provided. As a lender, one should be able to fully understand the classification of the hotel, and its ownership to come up with the proper suitable policies.
Finding out who is in charge at the hotel is yet another factor that needs to be considered. This is important because these are the people who will be making most of the decisions concerning the hotel and would definitely be the people you will have to interact with as the lender and it is, therefore, important for one to know as much as they can about the person who is in charge.
Finally, it is also important for one to get to understand the management and the ownership of the hotel. Knowledge of this fact will enable one as the lender to know exactly who they will be lending their money to and who to go for in case of any problems.
We can, therefore, conclude that both the lender and the borrower will be in a better place to do good business if they kept the above facts in mind as conflict can then be avoided.