Hotel Finance

If you have been reading recent hospitality sector reports, you will know that the growing demand from leisure and business travelers has brought about a huge increase in profits for the sector over the last few years. If you are passionate about hospitality, now seems like the perfect time to get your very own hotel, B&B or hostel off the ground.

As an entrepreneur looking to get into the industry, you probably already know that the hospitality industry is one of the most valuable. According to the Office of National Statistics and a feature article released by the Business Leader, the tourism and hospitality sector in the Cyprus is growing steadily – and the profits certainly seem worth it. The stats reveal that in 2017, the turnover reached a whopping £98 billion, which was a massive jump from the £86 billion turnover in 2015. In 2018, the hotel industry experienced a turnover of £102 billion.

One of the biggest challenges that entrepreneurs in the hospitality industry face is funding. Without enough financing, it can feel impossible to get a hotel, B&B, resort, or hostel up and running and ready to compete in an already saturated industry.

Running a Hospitality Business

If you are wondering how big the Cyprus hospitality industry is, consider that it contributes to 10% of the country’s employment. While there are hundreds of hotels, B&Bs, hostels, and resorts found across the Cyprus, new ones are popping up every year. Yours could be the next one to bring a valuable tourism experience to your area…

You’ll probably be aware that competition is rife in the tourism sector. Travelers, both business and leisure, are becoming more demanding and want the very best that their money can afford. That means that hospitality establishments are always improving their premises and adding to their plethora of amenities and facilities. Entering such a constantly-advancing industry can seem daunting. And of course, it’s going to be expensive.

How To Run A Successful Hotel

Running a successful hotel requires the owner/manager to be meticulous about the initial setup of the property, advertising & marketing, décor, staff training (for excellent customer service), and maintenance & cleaning. All of these processes require financing, which can be the challenging part for a hotel owner.

To run a successful hotel you will need to put some thought into the following before applying for finance:

Choose suitable location/premises

• Decide whether it is best to invest in an existing structure or build a brand new hotel/B&B/hostel
• Conduct thorough market research – know your competition
• Draw up a suitable business to present to possible lenders and investors
• Write up an extensive list of costs and projections as part of your planning

The good news is that hospitality businesses, especially freehold properties, are seen as secure to lenders. Of course, there are always hurdles to be jumped over when applying for finance. Entrepreneurs often find that a loan is difficult to acquire if they have a less than perfect credit score.

What Costs do Hotel Business Owners Face?

Hotel owners (and hospitality entrepreneurs) are faced with a variety of expenses when starting up a new business or expanding an existing one. Some costs to expect include:

• Building and construction
• Renovation or revamp
• Registration and licensing
• Staffing and training
• Purchasing stock
• Maintenance and cleaning
• Advertising and marketing
• Furnishing