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Lender and hotel developer reviewing business plan for hotel construction loans
You need a thorough business plan to get hotel construction loans.

If you’re planning on building a hotel from the ground up, then you’ll need hotel construction financing. These types of loans help you acquire the land and build the hotel of your dreams. However, it’s important to note that you will need to sort out some details first. For instance, you will need a solid business plan to submit with your application. Keep reading to learn more about hotel construction loans and business plans.

How to Get Hotel Construction Financing

If you need hotel financing for a construction project, there are a few steps you’ll need to take. Remember, lenders are placing a lot of trust in you and there’s a significant risk if you default on the loan. Therefore, the application process exists to ensure your project is a sound investment for their money. 

Construction loans for hotels are particularly risky for lenders because there’s no proven track record of success for that particular property. After all, you haven’t even built it yet if you need hotel construction financing. Therefore, it’s critical to complete a really thorough analysis and have comprehensive plans for how you will succeed and, ultimately, pay back your loan. Part of this is having a detailed business plan for your hotel. 

Why You Need a Thorough Business Plan for Hotel Financing

Creating a hotel business plan is an important step before seeking hotel construction financing. There are many parts of a hotel business plan, and having a really thorough one can help calm any fears of risks from a lender’s perspective. Some things you might put in your business plan include:

  • Executive Summary: This is a summary of what your vision, goals, and mission are. It usually is at the beginning of your business plan, but it may help to write it later in the process. 
  • Market Analysis: What is going on in the hospitality industry that might affect your hotel? Who are your competitors? What are they doing right and wrong? Who are your ideal guests? What is your competitive advantage? These are questions you answer through a thorough market analysis. 
  • Services & Amenities: This is where you detail how many rooms you will have, what amenities you will offer, as well as basic pricing outlines for each offering. 
  • Operations: Your business plan should also explore many details about your operations, such as the personnel you need, what you will outsource, and what your startup and operating budgets will be. This is also where you’ll determine your marketing and distribution plans. This is also likely where you will determine whether you’ll be a boutique hotel or a franchise hotel. 
  • Financial Plans: In financial plans, you explain things like the business structure you will have, how much start-up capital you will need, where that capital will come from, and how you will pay back your hotel construction financing. 

As you can see, business plans are important for showing your hotel lenders exactly how you will use their money and pay them back. 

Stonehill – Specializing in Direct Hospitality Lending Since 2014

If you’re in the hospitality industry and need financing, choose our experts at Stonehill. We are a direct hotel lender and have provided properties throughout the U.S. with billions of dollars in loans and investments. Whether you need construction loans or hotel bridge lending solutions, we have options to suit your situation. Our team helps with creative financing solutions and strategies to help your business grow and succeed. Contact us today to discuss your financing needs with our professionals.