MAXIMIZE THE BENEFITS OF RENOVATION
In today’s competitive market, the benefits of renovation are giving hotels an edge in attracting new and returning customers. Guests expect a hotel to be well maintained and comfortable, and that means more than just replacing worn out furniture and mattresses. It is essential to keep a hotel current in atmosphere, service, and technology to meet or exceed guest expectations.
Hotel renovation is your best guarantee of continuous revenue. By industry standards, a renovation cycle peaks at three years at which point a new renovation must be considered. Many investors use the renovation to upgrade their status with their brand, and some use it as an opportunity to change Brands.
RAISING RENOVATION CAPITAL
Option One; Sixty percent of hotels refinance their property at a lower interest rate for a longer period and include Furniture, Fixture, and Equipment (FF&E) budget. Frequently the owner wishes to make structural improvements to the hotel, so they will also include a Property Improvement Plan (PIP) budget in the re-finance. The hotel typically has substantial equity allowing the owner to re-fi the hotel and include an FF&E plus a PIP without being required to inject new cash equity into the property.
Second option: For different reasons, the owner may prefer not to re-fi the hotel. SBA-Capital would arrange to finance FF&E and a PIP loan. With significant hotel equity SBA-Capital will arrange 100% financing for the FF&E and the PIP loans.
VALUE OF A PIP OR FF&E LOAN
An effective PIP or FF&E should help owners gain market share, increase guest satisfaction, drive revenue performance, and enhance profitability. Elements like lighting, faucets, and fixtures are foundational for brand standards, but now energy-efficient equipment upgrades are entering the equation
FIND A RENOVATION LENDER YOU CAN BANK ON
Hotel renovation is a unique endeavor within the unique hospitality industry. A delay in financing the development of a commercial property is standard fare and presents few major issues. A delay in securing financing for an operational hotel property renovation can seriously jeopardize guest experiences and the hard-won equity of your hotel brand.
SBA-Capital, with years of lending and construction experienced, understands the entire process of hotel renovation. We are truly a partner and will streamline the loan approval to closing process while holding you accountable to provide the required documentation promptly. Choose wisely, and your renovation can be a positive experience for you and your guests.
HOW TO QUICKLY CLOSE A CONTRACT ON AN EXISTING HOTEL
Option One – Start loan process soon as Seller/Purchaser contract is executed: This “old standard system” has been used forever and works very well; unless you would like to close soon as possible. The following two options will help expedite the closing and will be an invaluable tool for the seller or lender and perhaps both.
Option Two – Approve the collateral Immediately: SBA-Capital, with the aid of financials and tax returns, will approve the hotel for a certain loan amount. Example, assume the hotel sales price is anticipated to be $6,000,000, and the buyer will pay 20% down. SBA-Capital will take the financials and determine if the cash flow supports the $4,800,000 (80%) loan amount. If so, all potential purchasers know up front the hotel’s cash flow will service the 80% loan. Very helpful working buyers and speeds up the closing since the lender has already stated the cash flow of the hotel will support the loan. SBA-Capital provides the hotel preapproval service at no charge.
Option Three – Pre-approve the purchase: SBA-Capital, with the aid of financials and tax returns, will determine the size of a loan the purchaser will qualify for assuming they pay 20% down. This buyer can now purchase the above hotel (assuming they qualify) or another hotel in a similar price range. The time it will take for the pre-approved buyer to close on the hotel they may purchase will be greatly reduced because of the pre-approval.
Review of above three options: Option one will typically take 60 to 90 days to close. Option two or three will typically take 45 to 60 days to close. Combining Option two and three will typically save a week or more on closing time. Additionally, option two and three sends an unequivocal message that the cash flow from the hotel will support a debt as described above and all parties know the purchaser is qualified. With all doubt removed, seller and purchaser can truly negotiate what each party will agree too.
SBA was founded to help the local business person and create jobs in the U.S. The program has exceeded all expectation creating hundreds of thousands of jobs each year and total annual loans typical exceed 30 Billion dollars annually. Our objective at SBA-Capital is to make it possible for our borrowers to select and obtain the best possible loan for their financial and wealth planning.
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