How Boutique Hotels, Inns and Motels are using Loans Well

As I write this article, businesses worldwide are facing unforeseen situations. Today, we are in a time where every decision we make will have a bigger impact on our future than ever before. This is a market that’s hard to understand or predict. A wrong step can lead to a business not lasting too long while a right step can lead to a business being amongst the few surviving businesses with the whole market to serve soon. It’s quite safe to say that surviving businesses will boom for a while once the turmoil comes to its end.

Looking at the hospitality industry, the smaller boutique hotels, inns, and motels show that business has reduced. Costs of running operations have gone up due to distancing, PPE, sanitization, and higher food hygiene standards. These are critical in these times. Yet, not all business setups in the industry are losing ground. Some are sailing through and holding tight for the market to get back into some level of stability. By the time that happens, is it natural that these businesses would see a sudden boom like never before? While no one can give a definite answer to that, it’s likely to be true.

Our records of transactions and understanding of business lending trends and patterns lead us to notice that small hotels are taking up loans more now, and knowing this, we dove deeper to learn and understand why it could be a good decision. Being a lending company, our business thrives in the long term only when our clients do too. This is why we are writing about what we observed and believe are likely to be good ways in which boutique hotels, motels, and inns can enjoy a business loan.

1. Marketing to Retain a Name

This is the most common investment smaller hotels are currently making. By trend, 50–70% of a small hotel’s revenue comes from repeat business. With that in mind, it’s easy to see why remaining present in the market is important, even if the presence may not lead to immediate conversions. If your business matters, it’s not worth letting everyone wipe its name from their minds. That said, marketing does cost.

Keeping costs low is a great idea, but maintaining liquidity is important. Businesses are using loans to sustain ongoing operations, while a little boost in cash can help them keep their market presence intact. In a bid to keep costs low, many businesses are turning to targeted marketing versus print and televised ads, and for those new to it, now could be the right time to explore it.

1. Employing Yield/Revenue Management Consultants

One big advantage of scale that larger hotels and chain hotels have on their side is the ability to afford dedicated revenue management experts. The business owner, reservations manager, or a similar management position in smaller, independent units handle this task, but it is sometimes completely overlooked. But, recent years have proven that strong revenue management can get returns on investment like almost no other investment that a hotel can make and this tends to encompass benefits across all seasons and during tough as well as lucrative times.

The solution for getting access to the right yield/revenue management expertise available for smaller hotels, is to use consultants. Instead of having a full-time revenue management team, having consultants gives you the same level of expertise while keeping your costs as low as the hours of consulting that you may actually need.

1. Investing to Retain the Most Valuable Employees

Human Resource is the single most valuable resource in business. Retaining some of your most valuable team members can be an invaluable feat. If all it takes is a few months of pay (at a lowered scale), it’s a wise choice. A loan can be helpful to arrange for that.

If the cost of hiring a fresh team member and investing in getting them trained strong enough to take over the responsibilities of the previous team member seems to outweigh the cost of retaining, you know what the right choice is.

1. Using this Time for Renovation

It’s never easy to keep up with current times and hotels need renovation every few years. Here is a time that’s bound to be dull, so why not make use of it? A lot of borrowers are utilizing this time to revamp their products and apart from being a good use of time and money, it would give great content to showcase in the marketing campaigns that you would need to get back on track when the season is back!

1. Adding Services for the Current Market

How would you like to have some immediate added revenue? If you haven’t given it a thought yet, you might be interested in knowing what hotels of different kinds might be able to offer services that can attract business in the current market scenario. Here are some quick examples:

• Food delivery
• Spa therapies to promote wellness and post-disease recover
• Fitness activities in the garden or wellness center
• Any special recreation that can accommodate social distancing
• Rooms for quarantine purposes

Getting a Business Loan for Hotels

There are some options available out there – SBA loans and Bank loans are the most preferred but it may not be available to many borrowers in the current market scenario.

If you’re looking for an alternate business loan, you’re welcome to use our application to get in touch with us and we will offer you a competitive deal and be able to serve you well, even during these tough times.