Hotel Asset Finance can provide financial help to hoteliers who are working hard on a daily basis to offer their guests quality accommodation, facilities and supporting assets, for all areas of the hotel including bedrooms, bars and lounges and fitness centres. All of the assets in a hotel help to ensure that hoteliers make their guests’ experience as accommodating and memorable as possible. Could our tailored Hotel Asset Finance packages help your hotel to gain funding you need, whilst also improving your cashflow?
What is Hotel Asset Finance?
Hotel Asset Finance is simply a financial tool used by hoteliers to fund their hotels, which enables them to access the assets they need for their business in a financially viable way. It can be used to fund a huge variety of equipment essential to the running of a hotel. Hotels need to cater for a vast number of guests, many with differing needs. There are the obvious requirements that are expected by all guests, such as a bed in every guest-room down to the teaspoons used to stir their tea at breakfast. The cost of all the required assets can seem never ending for a hotelier, and the price of can be astronomical, making investment in their property a daunting prospect. Regardless, if it is a hotelier setting up for the first time or looking to renovate their existing hotel, this bill will quickly eat into budget or cashflow, so in order to obtain the required assets, hoteliers are able to use Hotel Asset Finance. Hotel Asset Finance enables hoteliers to spread the cost of the equipment over a number of years, generally over two to five, paying monthly until the asset has been paid off.
What can be financed using Hotel Asset Finance?
Anything in a hotel then it can be financed. As previously mentioned, the amount of equipment hotels need just for their basic operation is mind boggling. For each room as standard a guest will find, a bed, two side tables, lighting and lamps, a desk and chair, television and other electricals, a bathroom suite, wardrobes and a chest of drawers and air conditioning and heating controls. All of this can be financed. Of course, the bedrooms are only part of the overall guest experience. Your property may also have or want to offer leisure facilities: a gym, relaxing pool with a sauna and steam room. It is essential that every hotel has a kitchen, and a subsequent dining area to feed your guests at breakfast, lunch and dinner times if required. Then there is the back of house and back office, where hoteliers and their team will require laundry equipment and office equipment. Finally, there are the communal areas, in other words, the reception, bar and lounge areas to consider. These are the focal points of any accommodation venue and set the scene for guests so must be lavish but inviting. Everything that you can imagine in the hotel is able to be financed and the upfront cost can be spread over two years or more.
How does Hotel Asset Finance work?
At GSM Finance, we work with a panel of over 30 lenders, all of which have a different risk profile and some are more comfortable lending on certain assets then others. With this knowledge we are able to take certain assets for your hotel to certain lenders and other assets to others, to ensure you get the right tailored package. It will all start with a quote, invoice or purchase order from your supplier. Once this has been received, your dedicated GSM Finance broker will use the information and handle your application from there on. Your broker will set up a company profile on our secure database system. In order to do this, they will need your latest annual year-end accounts and the previous three months management accounts. If personal guarantees, commonly abbreviated “PGs”, are available from a director of the business, then your broker will also need them to complete a Statement of Assets and Liabilities. When PGs are available, this generally gives access to better rates from our lenders as this gives them an added level of security so that in the worst case the director will guarantee the return the financed asset.
Armed with all this information, your broker will take it to market and find you the most appropriate lender and will provide you with an indicative quote. Your indicative finance quote will outline the term of the agreement which is set to the business’s preference, as well as the monthly repayments due.
Should you wish to proceed, your GSM Finance broker will then take your application to credit, which will then be approved by the lender, and the funding will be allocated. The lender will then pay your supplier directly in full, your supplier will supply the asset and the lender will then collect the monthly payments from the hotel.
What Other options are available to Hoteliers?
Business Loan: Hoteliers are also able to take out business loans. However, these generally would be in place to supplement their asset finance package. It is highly unlikely for a business, like the 14 bed Boutique Hotel, to be able to get a £750,000 unsecured loan. It is not possible however to finance all business expenditure, which is the vital role that business loans play. Essential costs to the smooth running of a hotel business such as staff wages, stock costs and marketing budget can all be funded using a business loan. However, business loans should be left as free as possible to act as a rainy-day fund for the quieter industry months in the calendar year.
Refinance: Another way that the hotels are able to raise the finance they need to expand is through refinancing existing hotel assets. This option can be suitable for an established hotelier who is looking to upgrade their property and its assets. For example, if the hotel was part of a small hotel chain, we would be able to structure deals where the lender would take title of business assets already owned, say the £100,000 air conditioning installed in Hotel One. The lender would then lend that amount to you and lease the asset back to the business, recouping the loan through monthly repayments secured against the business asset.
Study 1: Throughout 2019, GSM Finance helped the Management team at a 3-star, eccentric boutique hotel on the picturesque Brighton seafront to build a tailored Hotel Asset Finance package with a value of £350K. The hotelier required our Hotel Asset Finance assistance to fund multiple assets including bedroom furniture, chic sofas and bar stools for their Clubhouse and a neon sign to help them stand out from the crowd. With a combined Hotel Asset Finance and Fixtures and Fittings Finance package, this 19th-century property was able to retain its façade, whilst enchanting guests with its 21st-century interior.
Study 2: During the early stages of the Coronavirus pandemic, GSM Finance assisted a bed and breakfast in Notting Hill, one of Central London's exclusive boroughs, in desperate need of Hotel Asset Finance. The hotelier needed to obtain assets to make their property COVID secure. Such assets included: protective screens, additional laundry equipment and food ordering software for in-room dining. As their dedicated asset finance broker, we were able to provide a £250k business loan to this hotelier through the Coronavirus Business Interruption Loan Scheme (CBILS). Thanks to us, the hotelier was able to host front-line NHS staff and other key workers who were having to live away from home throughout the peak of the pandemic.
Hotel Asset Finance packages from GSM Finance are a financially viable way for hoteliers to attain the assets that their property requires both in the present and future to accommodate their guests and attract new clientele. Hotel Asset Finance will also prove to be essential to hotels during crises like the Coronavirus pandemic, where quick access to funds is needed to purchase assets that make their property secure and protect both staff and guests.
Contact us today to book a call or meeting with one of our Hotel Asset Finance brokers to discuss your requirements and how we can help your business.
020 8874 9994