Opening independent hotels can be challenging. Securing hotel financing can also be challenging. This is because different kind of businesses come with different earnings potential and risk level. For instance, gas station financing is a lot different from hotel financing. Here are some tips to help people who are interested in opening hotels.
- Start with your relationships. Building good relationships is the first step in getting the right financing to open independent hotels. There are a lot of banks or other financial institutions who consider independent hotels to be too risky to invest in. This does not mean it is impossible. There are hotel financing companies out there that can help. Because these hotels are viewed as being more risky in terms of investing, developing relationships with lender is more important here than in other businesses.
- Develop a good business plan. In addition to developing good relationships with lenders, it is very important for people interested in opening independent hotels also develop a good and thorough business plan. You need to show how the hotel you want to open is going to operate and be successful in order to get any kind of the hotel loans that is available for independent hotels. You have to prove that your hotel project is deserving of financing. What makes your brand better than a national or international brand?
- Develop a marketing plan. Unlike large chain hotels, your independent business will not be able to rely on a network of businesses and on a larger advertising and marketing effort. The brand awareness is there for Sheratons and Hiltons. With the web, you can get the word out about your business. Include Groupon. Facebook and other marketing options that were not available in years gone by. Just make sure that when you approach lenders, they can see that you have a marketing plan in place and can properly execute it to nurture and grow your new brand.
- Get your ducks in a row. Make sure you have a great location, get all of the property rights details completed, put together your physical plan and things like the utilities in place The more planning that is complete and the more of your documents you have together, the more organized you will look and that is a good thing when you are talking to lenders about your independent hotel project. The last thing lenders want to do is give money to someone who does not seem to have a handle on all of the details that go into opening hotels. The more you have done to show how you can hit the ground running, the better your chances are that your hotel loan will be approved.
- Provide the best quality. One of the reasons people like independent hotels is they are often thought to have a better quality. While people go to big chains because they offer the same level of service just about everywhere, you need to prove to your investors that the service you provide your guests will be second to none. This means everything, from the ground level up, needs to have a quality that is unquestioned. You need to show that there is going to be a compelling reason that travelers and others will go to your independent hotel over other lodging in the area.
- Coordinate with other local businesses. You want to be able to provide something other hotels cannot. When you are working on relationship building, work with the other businesses in your area. Work with your local government. Perhaps there are conferences in your area that can be held at your business. Talk to the visitors’ bureau or the chamber of commerce. If, when you are talking to lenders, you can say, “I have commitments from XYZ to hold these events at my hotel when it opens,” that will show the lender just how viable your hotel is. This can also show that there is a need in your market for your hotel.
Opening a new hotel is a bit deal. Securing financing for independent hotels can be daunting but is also very possible if you put in your work and due diligence.