HOTEL FUNDING

Hotel funding is the key to being successful in the hotel business. It is important to take the time to find the right hotel funding based on all options that are available to you. The goal is to find the most ideal funding for hotel needs. Research the various loans available as well as the interest rate, terms and allowable lending rates available to you. You should be able to find the ideal opportunity that fits your situation.

The sluggish economy has slowed travelers thus affecting the number of transactions being executed throughout the industry. Debt is harder to obtain. There seems to be a difference between those who believe there should be a pricing adjustment and those who feel that their cash flow is better than it was a year ago. Smart money now is buying hotels if they have sellers that have adjusted the pricing and are not still thinking it is still ’07. To make up for a sluggish economy, some principals in hotel funding are focused on growth overseas, particularly in the Asia-Pacific and Europe/Middle East regions.

There are still many opportunities for hotel funding. You can consider hotel construction loans, hard money loans and hotel construction loans from direct lenders. One of the best routes to take is to talk to a loan officer directly or work with a financial planner to determine the right investment for you. You can find out more about hotel funding by talking with your banker, as well. Some lenders only operate within the country. If you are a foreigner, it is possible that you will be restricted on how much of your property purchase can be financed. Many countries limit the amount of the property that can be financed at all and it cannot be financed by just anyone.

Current events have brought changes to the whole industry as well as hotel funding. There is little capital to spread around and deals are hard to close. You might consider using a broker to help you with your project. A good broker should have ties to lenders to help them finance their assets. Brokers can also be helpful because they know what the lenders’ parameters are. Some lenders have strict limits as to what they are willing to use as criteria to lend on; from geography restrictions to brand requirements.

When searching for hotel funding, be sure the lender has everything he needs to underwrite the transaction. These should include financial statements of involved partners, getting references from previous franchisors and brand contacts to check past relationships.

Check the advantages of each type of hotel funding. Conventional loans can offer up to 65% on Loan-To-Value and up to 55% cash out Loan-To-Value on hotels. Closing costs are usually less than an SBA Loan Program. You can get length of loan terms to meet your needs. There are two types of SBA loans. First is the 7a program for financing of $3 million or less. The second is the 504 program for purchases between $1 million to $6 million. Each has its strengths and specific requirements. Though a bank does not have to participate with SBA, it is noteworthy that most banks do participate. Talk to your agent about which type of loan is right for you.

Certain transactions require multiple lenders. It is true that hotel funding fro projects over $20 million will require multiple lenders. Most local banks cannot handle this risk without the help of larger lenders.

Now is a good time to start you search for hotel funding. Most of the industry feels that the economic climate is ready to rebound and you will be opening to a robust economy by 2010 and 2011.