Hotels

An entrepreneur had bought a building in Emden, Germany, at a favourable price with the aim of running a hotel there. He needed another 700,000 EUR for renovation and furnishing.

We analysed the competitive situation at the location and advised positioning the hotel in the lower midfield in terms of price and in the upper midrange in terms of supply.

With the help of occupancy and cost data from the industry association, we worked out a monthly profit and loss statement and combined it with the interest and redemption payments to the banks. This showed the viability of the project.

For the financing, we put together a package of bank loans, loans from the development bank of the state of Lower Saxony and a subsidy from public funds.

What banks look at in a hotel business plan

Hotel financing is driven by occupancy and room rate. The plan should show the number of rooms, the average daily rate, the occupancy by month and the resulting revenue per available room, supported by a market analysis of location, competitors and demand drivers such as tourism, business travel and events.

Costs need as much detail: staff, energy, laundry, food and beverage, commissions to booking platforms, maintenance and renovation reserves, and lease or financing costs. Seasonality should be reflected in a monthly liquidity plan.

Banks also consider the experience of the operator, the purchase or lease conditions and the value of the property as security. A clear presentation of these points makes the application easier to assess.