Hotelisten Insights - Insider knowledge for private hotels

"Generally spoken are medium-sized hotels owner-managed and not operated on the basis of management or lease agreements like large chain hotels. In this case has the owner still complete control over the entire business. As a first step - before I even get in contact with the bank - I would need a meaningful set of numbers with at least a three-year review of the most important key figures of the business. Of course, the special circumstances of the covid pandemic will be taken into account here. A simple business assessment or balance sheet is by no means sufficient. The next step would be a good and coherent concept that shows the development potential with the planned investment. The guiding principle here is budget, budget, budget because banks don't want any unpleasant surprises when it comes to financing! With a good and logical analysis of the business performance, it is much easier to convince a bank."

"The route is through your bank. Of course, there are KfW funding programs for energy-related issues or other such things. However, the requirements for obtaining the funding are often very high and can lead to significant increases of the construction costs. Also, if you choose to go your bank, the attractive conditions offered by the KfW are neutralised again by the funding requirements and risk premium of the bank. In any case, the conditions need to be analysed very carefully and compared to the total costs. In simple words: Don't be fooled. Take a close look."

"The first problem arises with unspecific tenders and inadequate planning. The local assembly installer is asked what he proposes, but without even specifying in advance what exactly needs to be renovated. For example, person A will offer one fitting, and person B another fitting. It is often completly unclear whether the costs are calculated including the installation or not, by the amount of hours worked or on a fixed rate. As a result, many bids are not even comparable during the quotation phase. Especially with an approach like the one just described, many hotels run out of money during the renovation. There could be a bitter awakening at the end of the remodelling project if the costs are not precisely budgeted and negotiated in advance. Without a detailed budget and construction timetable that is binding for all parties, a reconstruction project should not be started at all."

"In my consulting work, I often experience that many hoteliers only rely on a single source of financing. It is advisable to examine various options, such as bank loans, investors or government funding programs in order to find the best solution. Before talking to the bank, the exact and detailed development of the company's performance must be outlined. Data from at least three years of business operations is extremly important - broken down into lodging and food & beverages. Otherwise, financing won't be successful. Revenues have to be budgeted in datail or even a bank that has been associated with the company for years will refuse financing. It is not just a matter of defining the financial requirements, but above all a matter how the credit can be realistically repaid. This requires a detailed set of figures. Very elegant is also the financing without external funds. To achieve this, the revenue needs to be analysed at an early stage, so that the measures taken ensure a positive development of the cash flow."

"Renovations should always be planned with the guest experience in mind. Hoteliers should ensure that the renovations meet the needs and expectations of their target group. Hereby, surveys or feedback received from guests can provide valuable insights. For this purpose, guest questionnaires can be provided with corresponding additional criteria. Far too little emphasis is placed on analysing exactly this guest feedback. However, it provides crucial information on what the guest really wants. Without this, you will miss the entire point at great expense.

In addition, poor communication between the different stakeholders, from architects to contractors and managers, can lead to misunderstandings and errors. Regular meetings and updates are important to keep everyone in the loop. Delays in the remodelling process are particular harmful to the project. Especially in the medium-sized hotel industry, people still trust that remodelling will "eventually be finished at some point". However, the fact that every day of remodelling costs money - because during that time the room do not generate income - is way too often overlooked. In contrast to the production industry, the hotel sector has a perishable good in the form of the room rentals. Our goods cannot be stored, so basically every day counts.

 Finally, it has to be said that the medium-sized hotel industry often lacks the sight of trends. Hospitality is constantly changing and hoteliers should always keep an eye on current trends and technologies to ensure that their renovations are modern and competitve."