Traditional sources of small business loans tend to discriminate against certain industries that are widely perceived as “risky” or “unstable.” As luck would have it, the businesses that are least likely to be approved for business loans are the most likely to need additional funding in order to stay competitive.
The hospitality industry falls into this category, largely because of the incredible amount of effort devoted to maintaining high-quality commodities and customer service. What these traditional lenders fail to realize is that the right business funding program would allow hoteliers to raise the level of competition even further and usher their industry into its next evolutionary stage.
More than a few hoteliers would probably argue that the reasons for their industry’s unfair perception could alternatively be viewed as a surplus of opportunities to increase revenue.
Here are a few reasons the hospitality industry is considered “risky” by traditional business lenders:
THE POWER OF THE ALMIGHTY WEB
Thanks to the Internet, one guest’s bad experience can go a long way, and fast. Most guests book online after scouring their social media feeds and researching popular websites like Expedia and TripAdvisor. A hotel must therefore have a flawless online reputation if it intends to increase business and keep loyal customers. This is easier said than done, which might explain why just eight percent of 4,000 travelers recently revealed to a global consulting firm that they are always loyal to the same hotel brand. The average guest is presumably well-aware of the Internet’s tendency to stretch the truth but will continue to base his or her decisions on the outlook of the hotel’s website, online reviews, and social media presence.
Improving a business’s online reputation is one of the primary functions of a digital marketing team. Within a very short period of time, hoteliers will become aware of which type of Internet user they should be targeting with advertisements while exposing their brand to a much wider array of potential guests. Their hotel’s Google rank will soar, and any negative content will become far less accessible than praiseworthy reviews. Potential guests will additionally be intrigued by an updated website and the flood of social media posts they receive during the summer or holiday season.
Hiring an in-house digital marketing team is bound to increase revenue, making it a worthy investment. Digital initiatives could take time to pay off but alternative business financing companies like United Capital Source offer several business funding programs that do not involve immediate, monthly payments or due dates. A Merchant Cash Advance, for example, is very appropriate for hotels because the majority of sales are conducted via credit card. With this program, a lump sum is provided in exchange for a percentage of future credit card sales. The bulk of the merchant advance is paid off when the investment begins to produce an uptick in sales, easing any concerns about covering operational costs or monthly expenses.
UP AND DOWN, ALL YEAR ROUND
A merchant cash advance is also tailored for the hospitality industry due to seasonality. Just one slow season can jeopardize a hotel’s future, not only because of the lack of business but also the effect this has on the busy season that follows. Owning a seasonal business requires making a number of investments way ahead of the busy season to maximize revenue during the three or four months when your hotel attracts the most guests. More staff members must be hired, necessary quantities of commodities (food, beach chairs, etc) must be secured, and marketing campaigns for exclusive offers must be launched. Unfortunately, these investments are not feasible for the hotels that are suffering so bad in the months leading up to the slow season that they can barely afford to maintain day-to-day operations and pay their employees.
If only there was some way to run and grow your business at the same time, even when business is at lowest point of the year? Look no further than a merchant cash advance, which alternative business financing companies can approve in under 24-48 hours.
This is why we believe merchant cash advances can truly be a game changer – it allows you to grow and run your business at the same time, even when business is at the lowest point of the year. Best of all, funding will reach your bank account in a matter of days, so you can order bulk commodities when they are cheap and train your new hires when you finally have the time.
YOU CAN NEVER BE ON TOP
Hotels must constantly spend more money to ensure customer satisfaction. They need to make sure their decorations and amenities do not become outdated if they don’t want to risk falling behind their competitors. Once again, this is easier said than done because the costs of these updates are rising and hoteliers often don’t know what they are lacking until a competitor shows them. Odds are, whatever your hotel doesn’t have can be accessed at a competing hotel, resulting in an endless game of catch-up. This is especially evident in terms of food and technology, as the average guest now demands an HD television, strong Wi-Fi signals all throughout the hotel, and menus to accommodate common food allergies or common dietary restrictions.
Having a great repayment history your first time makes you eligible for a second round of funding with better rates & terms that will reach your bank account even faster than the first, and any ambitious would no doubt jump at the opportunity to attain the most fashionable accommodations. There is always something more hotels can offer customers, or rather, something one hotel is offering that a competitor is not. Decorations and amenities are the two most important factors when it comes to customer service, so it only makes sense for hoteliers to do all they can to ensure that guests leave positive reviews and take glamorous photos.
A HELPING HAND IS ALWAYS WITHIN REACH
United Capital Source has helped many hotels and motels finance major improvements and continues to view such businesses as very reliable. This is because, while other businesses may not have a good idea of how much revenue they are projected to gain or lose, lodging and vacancy rates are confirmed way ahead of time. Loan experts at UCS can easily figure out how much a hotelier should borrow as well as which payment plan would have the least impact on cash flow. The hospitality industry is rife with competition but if you choose UCS as your source of funding, you’ll soon realize how prosperous your future can be when you are able to dedicate 100% of your focus to expanding your business.