Funding for Hotels & Motels

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SCENARIO IN THE HOTEL / MOTEL BUSINESS

Research says the hospitality industry in the U.S. has been witnessing considerable growth in the last few years due to the increasing number of international travellers visiting the country for both leisure as well as business trips. Cities like New York, Miami, LA, Orlando, San Francisco, and Las Vegas are known for being the most attractive vacation destinations in the U.S. Though the hotel industry in the U.S. got seriously affected due to the Pandemic, the situation started getting better from 2021 after the lockdown restrictions got reduced in different parts of the world and people started travelling again. In the dynamic hospitality industry in the U.S., the luxury hotel market is forecasted to grow at a CAGR of at least 9% from 2021 to 2026 (mordorintelligence.com). The luxury hotel industry is considered one of the most flourishing sectors in the U.S. due to the constantly-increasing number of international sports events, exhibitions and trade fairs taking place in different parts of the country. Also, the changing lifestyles and increasing disposable incomes of working professionals are immensely contributing to the growth of the luxury hotel industry. Besides, the market size of the regular hotel and motel sector was expected to reach 258.13 billion U.S. dollars in 2022 from 171.1 billion U.S. dollars in 2021 (statista.com).

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      Factors That Impact the Hotel Industry

      Political

      Hugely dependent on tourism and the government regulations of a region, the hotel industry pays taxes based on the tourism laws of that state/country. The governments which are more open to tourism laws withdraw a hefty amount of tax from the hotel industry. However, many governments are devising policies that can aid their hotel industry.

      Economic

      Economic fallouts like recessions, inflations etc. massively affect the luxury hotel industry, as these reduce people’s spending capacity. But, budget hotels, on the other hand, witness higher demand in situations like these. Also, the wavering foreign exchange rates often turn out to be another notable factor that affects the industry, as it increases or decreases the ability of foreign travellers to pay for hotel services.

      Technological

      The current tech-savvy generation shows great interest in traveling. This is mostly due to social media platforms, where people post content describing their travel experience and inspiring more people to give in to their wanderlust. Besides, online booking facilities through various third-party apps or the official websites of the hotels have substantially boosted the hotel industry by making the hotel booking process simpler and quicker for the travellers.

      Environmental

      The hotel industry uses a huge amount of disposable items, eventually harming mother Earth in various ways. Hence, these days, hotels are being tremendously pressurized by governments as well as environmental activists to make sure they leave a minimum carbon footprint. As a result, many reputed international hotel chains are switching to biodegradable items to combat the environmental crisis.

      Current Trends

      Smart Technology

      The Internet of Things(IoT) is being incorporated into many luxury hotels to offer the guests a high level of convenience, efficiency and a sense of extravagance.

      Sustainability

      As people are becoming more environmentally conscious, they are preferring to stay in sustainable hotels that feature eco-friendly constructions, ample energy savings and highly prioritize waste management.

      Virtual and Augmented Reality

      These technologies, though, were once used in only the gaming and entertainment sector, today these are being used by hoteliers to offer an augmented experience to their guests. Where Virtual Reality(VR) reconstitutes the real world with visual and audio inputs, Augmented Reality(AR) layers virtual elements onto the real world. VR enables people to take virtual tours of the properties while helping them to make the final booking decision. On the other hand, AR allows hotels to provide information to guests using interactive maps.

      Brand Differentiation

      Today, many hotels all over the world have started putting efforts to differentiate their brands by incorporating uniqueness in their designs, layout, services etc. The primary purpose of this activity is to stand out in the highly-competitive industry and attract more customers.

      WHY DO YOU NEED FINANCE FOR HOTEL OR MOTEL?

      To expand into a different city or town, as having a presence in multiple locations can draw more crowds.

      To conduct impactful marketing campaigns, make a noticeable social media presence, list the property on popular booking websites etc.

      To hire skilled and experienced executives for the front desk, management and all back-end activities.

      To renovate the property when needed and maintain it regularly.

      To upgrade equipment, and rooms or make other expenditures to get all the licences and registrations, required to run a hotel.

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      MCAs For Hotel Businesses

      Definition

      A hotel cash advance is the sale of a specific percentage of the hotel’s future revenues, in return for a lump sum amount. An MCA lender pays an up-front lump sum to a hotel owner and buys a percentage of the hotel’s future sales.

      Repayment Structure

      The lender typically redeems the percentage of sales that it has bought through an automated approach, a daily ACH(Automated Clearing House) deduction directly from a bank account. The cost of a merchant cash advance is typically presented as a factor, which is a fixed percentage of the amount advanced. This is added to the amount that the restaurant needs to pay back to the MCA lender. MCA loans are ideal for businesses that accept credit or debit card purchases, as the repayment amount gets directly deducted from the daily credit/debit card sales of the borrower.

      Funding for Hotels & Motels
      SIMPLE PROCESS TO APPLY FOR MERCHANT CASH ADVANCE FOR YOUR HOTEL

      As we mentioned before, the application process is simple.
      We will break it down for you step-by-step.

      Step 1
      Funding for Hotels & Motels

      The borrower needs to provide the lenders with social security numbers as well as signatures to get the credit pull authorized.

      Step 2
      Funding for Hotels & Motels

      IMCA lenders ask for sales volume by card type, return frequency, processing fees, chargeback history, monthly costs, batch frequency, average transaction size and processor imposed reserves. The borrower needs to submit all pages of each bank statement, besides the above-mentioned documents. Articles of Incorporation, K-1 of recent business tax return, business property lease, any photo ID, voided cheques, recent business tax return and financial statements are also needed to be submitted.

      Step 3
      Funding for Hotels & Motels

      The underwriters then get in touch with the borrower’s vendors, business property landlord, if any, or the bank holding the mortgage on the business property, to understand if the business has the permission of continuing operating in the same location at least throughout the loan repayment time frame. 

      Step 4
      Funding for Hotels & Motels

      The lenders contact the borrowers over calls to review the business information, discuss the use of the advance and assess the borrowers’ willingness to follow through with the contract terms. Some MCA providers hire inspection firms to perform a site inspection by visiting the borrowers’ location to verify the address, examine inventory and take note of the number of credit card machines available on site. 

      Step 5
      Funding for Hotels & Motels

      Finally, the repayment method is decided on and approval is given. The funds get transferred to the borrower’s business account within 48 to 78 hours.

      Primary benefits of opting for MCA

      Funding for Hotels & Motels

      The hotel business is seasonally dependent and often witnesses fluctuations in cash flow. MCAs turn out to be beneficial as these come with a flexible repayment structure and the lenders approve finances considering the hotel’s performance during the high seasons.

      Funding for Hotels & Motels

      MCAs are unsecured financing options, which means the lenders do not ask the borrower to put up business assets as collateral.

      Funding for Hotels & Motels

      There is often a long list of expenses when it comes to running a hotel successfully. Also, many times hotel owners need to deal with multiple erratic crises, for which urgent cash is required. MCAs offer quick funds that usually get disbursed within 24 to 72 hours of the approval.

      Funding for Hotels & Motels

      MCAs do not put restrictions on the usage of the funds. The borrower can utilize the advance in any business operation.

      Business Line of Credit for Hotel Businesses

      Definition

      Similar to a credit card, a business line of credit offers business owners working capital, when needed, along with the flexibility to decide how much to use and how much to keep reserved for future use. Interest will be applied to only the amount used and not to the entire approved amount. Business LOC offers hotel owners more sustained access to capital. However, the hotel financing rates, a borrower accesses through a business line of credit, depending on the length of the repayment term, which often ranges between six months and five years.

      Primary Benefits

      Funding for Hotels & Motels

      These come with low-interest rates.

      Funding for Hotels & Motels

      There is no prepayment penalty, in the case of a business LOC.

      Funding for Hotels & Motels

      A flexible financing option, business LOCs allow hotel owners to use the funds for multiple business purposes.

      More info on Merchant Cash Advances (MCA) & Hotel Funding.

      NEED FUNDS TO GROW YOUR HOTEL BUSINESS ? APPLY FOR MERCHANT CASH ADVANCE TODAY.