The economic cycle dictates a lot of the business done by the tourist industry. Because travel, vacations and leisure activities are considered discretionary spending, they are often the first thing that people cut out during periods of economic stress. Indeed, not only private individuals cut back on travel but it is often the first thing to get thrown out as businesses reduce their spending. With a reduction in business and tourism travel, many hotels start to feel the pinch of a slowing economy before many other industries.
Luckily, in the past several quarters there has been an upswing in local travel. International trael is still down but as the economy improves people who might otherwise have chosen to take a vacation in Europe or South America are choosing to stay closer to home, giving the advantage to domestic hotels. However, the results of this upswing may not be felt immediately or quickly enough for some of the hotels still suffering from lingering months of slow business. In this case, finding hotel funding to keep up with the new business is crucial.
Many employers had to lay-off employees, cut expenses and put off improvements. By finding hotel funding now and hiring staff, reinstating services and starting renovations is all possible within a short period of time. The question then becomes, where to find this hotel funding? Most banks are still reticent to lend money to an industry so at risk to the whims of the market and have cut back on their hotel funding. Private investors have also turned to larger chains for more stability in the fluctuating market. Finding hotel funding has become much more difficult for small independent businesses.
Hotel owners have other options for hotel funding than traditional lenders who have not rejoined the upswing in tourist industry spending. Many hotel owners are turning to alternative forms of small business funding such as merchant cash advances and unsecured small business loans. These alternative hotel funding sources can be very useful to the owner who needs cash fast and can pay it back through sales.
This alternative hotel funding can be paid back through credit card sales instead of designated deadlines for payments from the owner. This means that the advance or loan is only returned in direct proportion to the sales made. This is ideal for many hotels as there are better and slower weeks or months. They can pay back the funds only as quickly as funds come in. This means no scrambling to meet arbitrary deadlines for paying back hotel funding.
In the end, many hotels will try traditional sources of hotel funding but find themselves with nothing but stacks of paperwork to show for it. With alternative sources of hotel funding, the owner will get cash quickly, have full discretion over how it’s spent and be able to pay it back as business comes in. Of course all business owners should consider if obtaining extra capital for their businesses is essential for them or not. Sometimes it’s good just to know that one has the option of obtaining extra cash in case the need arises.
hotel funding,
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