Getting a hotel loan can be a Herculean task due to the dreaded word “debt” which seems to call in questions into even legitimate business deals but before getting the needed loan to set up a hotel, the basic requirements that are supposed to be met before the hotel loan is granted presents the real task. To be very frank, lenders are eager to get creditors for a fact but how many lenders are willing to give out hundreds of thousands to millions of dollars in hotel loans that will end up in the wrong hands; or worse still, pass through the right hands but end up in the abyss of a very bad project? Fro indeed, it is sometimes difficult to predict whether a hotel loan given out will bring back the huge returns that are expected of it; i.e. whether there would not be any miscalculations about how well the success of failure of the hotel project will turn out. There are no two ways about this fact because no lender, desperate as they may be about getting clients to borrow finance from them, will be willing to shell out that large amount of money as loan to build a hotel which will be struggling to pay back even after a quarter of a century.

Hotel loans used to build hotels and related properties like resorts, guest inns are meant to be seen as potential success stories even before they are completed and after they have been built, they should keep growing or at least remain as has been predicted so as to be able to muzzle out something to pay back lenders for the hotel loan. This has now forced many lenders to ask for an insurance against any possible eventualities that may arise to cause non-payment of the hotel loan. When such applications are being made by new entrants into the hospitality fold and thereafter considered by the lenders, certain factors are taken into account. They will always ask for the proprietors’ track record in the hotel industry while they look deep down into the hotel’s business proposal. Sometimes, external hands are also ‘borrowed’ to help assess the viability and sustainability of such gigantic projects that will see millions to billions being sunk within just a few years.

However, many banks and financial institutions only like to give out hotel loans where the new hotel in question is liaising with another hotel which has been in the business for a very long time. This means that individuals or companies applying to receive a grant in hotel loans can count on a high possibility of getting an approval if only they are going to be operating under the umbrella of a larger and more recognized hotel. Perhaps to these lenders, this more than the contract and terms of issuing the loan, is a more secured way of giving out their assets to be ‘tested’ and is to them, a way of being assured that payment will be made as and when due. Of course, to operate as a franchise with big hotel players means that there is security in getting back the hotel loan in the event that the new hotel fails to achieve its projected minimum in revenue target; thereby making it difficult to pay back its lender.

This explains why it is not uncommon to see large hotel groups like Starwood Hotels now known as The Sheraton Family; Hilton Hotel, Intercontinental Hotel Group and Best Western Hotels being represented by hotels bearing other names. It is simply because they are able to show the world and not only the lenders that they are a formidable force in the business who have been on the profit’s side and enjoy a reputable history of customer and client satisfaction which remains the driving force of any business. Therefore if you are a person toying with the idea of getting a hotel loan because you saw Steve’s Sleep Stalls being transformed into Steve’s Sweet Suites; there was a lot of calculations that went underneath the surface of the success story of today. But generally, if you can write a strong and convincing proposal for the hotel loan about your vision and mission, then go ahead and forward your application letter to your prospective lenders. Please note: Sean’s Shacks need not apply!