Given the unique nature of each hotel business, a lender will assess every hotel mortgage application independently. The criteria they will look at include:
- Your Experience as a Hotelier
If you are an experienced industry professional and have a track record, then you present a lower hotel mortgage risk and will achieve more competitive rates.
When investing in a business without being a hands-on manager, a lender will want to consider your key personnel. They may also look at licences and permissions in place.
Hotels make profits dependent on their capacity and level of occupancy. Lenders will assess the revenues achieved per available room, and your average daily rates to assist with affordability calculations.
If the hotel is new, or due to undergo refurbishment, a hotel mortgage lender is likely to ask for the business plan to see what the plans and projections look like.
If you have two years of trading history and can demonstrate profitability, you will have more hotel mortgage lending options and be able to meet affordability criteria.
- Hotel Marketing and Business Plans
To review the likely success of the business, a mortgage lender will ask for business plans and marketing strategies to assess the risk factor.
Your location is key to the success of the hotel, where the bulk of the trade is reliant on tourism or convenience. If your hotel is close to a central location, entertainment venue, transport hub or popular attraction, hotel mortgage lenders will perceive the loan as lower risk.
While these are the most important criteria a lender will consider, there are always options to negotiate or liaise with lenders who specialise in niche lending. If you are a new hotel owner or don't have a track record of accounts, give the Revolution Brokers team a call on 0330 304 3040.
