What Makes Hotel Lending Distinctive? | Hotel Marketing #HotelMarketing #BeatTheCompetition #Bezla Bezla.com No matter where you are on your hotel revenue journey, Bezla can help you go further. Bezla.com LLC Website: https://Bezla.com LinkedIn: https://www.linkedin.com/company/bezla Phone: +1-888-999-8086 1800 JFK Blvd Suite 300 PMB 91649 Philadelphia, PA 19103 - - - - - - - - - - - - - - - - - - - - What Makes Hotel Lending Distinctive? As the global economy recovers from the effects of the pandemic, it is not surprising that the hotel industry is bouncing back with it and even gaining significant growth. Because of this, it is vital to establish how and why hotel lending is unique and not like financing other real estate property. One thing to keep in mind is that a hotel is more than just real estate. A hotel has various aspects and components that make it an earning organization. And being an operational business, this aspect can make up half of what the hotel is worth. For this reason, it is not right to treat hotel loans the same way you would handle typical commercial real estate properties. A hotel is so much more than that. The hotel’s personnel are a crucial element of the business, and you should always consider them in lending a hotel. They are all the hotel staff from different service areas and can be from caterers to cleaners and therapists to bartenders. Majority of these workers are under a flexible contract, but some work under term contracts. This means that no matter what business decisions there are for the hotel, they must receive compensation for the duration of their contract. Therefore, a portion of the loan goes to cover these payments. This is one of the biggest reasons why hotels are different from other real estate borrowers. Another thing to consider is whether the property is part of a hotel chain. If a hotel is under a franchise, there’s usually a unified maintenance standard, which means they must follow specific criteria and requirements in maintaining the property according to the brand. Aside from franchise concerns, there are also costs involving the main business functions of the hotel. Some hotel owners take out a loan to sustain these expenses. Always confirm if a hotel has Hotel Management Agreements (HMAs) in place because this can significantly affect the hotel financing procedure. Like franchise agreements, HMAs may be in effect for extended periods, which essentially ties up the hotel to certain limitations. These are just a few pointers showing how hotel financing differs from other real estate. Again, don’t forget that a hotel’s value does not come solely from the physical property. Half of it is from being a functioning and earning business, which you should never overlook when evaluating a hotel. We have a handful of videos that tackle management agreements and their effects on hotel lending. Check them out at www.bezla.com/blog. If you need help with your hotel marketing, you may call us at 888 999 8086.
