The hotel industry is still feeling the impact of the coronavirus pandemic and lockdowns, which meant many hotels had to close their doors or only allow minimal occupancy for long periods in 2020 and 2021. As a result of this economic turbulence, the hotel sector is not expected to fully return to pre-pandemic levels until at least Q4 2022.
As a result of the economic situation and the UK population's changing tourism habits, hotel owners may find that their current finance no longer serves their business. While the government did release limited support packages for hoteliers, many business owners turned to lenders for help during the hardest months of the COVID-19 pandemic. However, now that the hospitality industry is recovering and hoteliers are welcoming back guests, it may be time to revisit these products and determine whether they are still relevant or need to refinance.
In addition, those who took out hotel finance before the pandemic may find that their entire business model has changed and, as a result, they are looking to reinvest in aspects of their hotel. So, if you plan to refurbish or even add a new property to your portfolio, it's always worth revising your existing capital stack to determine whether refinancing is right for you.
Since there are so many factors at play with hotel refinance, it's important to work with the experts to ensure you make the right decisions for your business both now and in the future. At Rangewell, we work with hotel owners to find and secure the finance that suits them, including when it comes time to refinance.
So, if you are ready to refinance or simply want to know if it is the best route for your business, get in touch with Rangewell today.
How hotel refinance works
Hotel refinance allows us to replace an existing loan, or multiple loans, with a new financial arrangement. The new loan will pay off the current debt and possible release new funds, depending on the individual refinance product and what you are eligible for.
You may refinance with the same lender, but we recommend exploring the whole of market to ensure you are getting the best deal, especially since there has been so much change in the industry in recent years. When it comes time to refinance, you benefit greatly from working with an independent broker like Rangewell, as our team of advisors has supported similar businesses to yours throughout the pandemic and we know the most common challenges and risks facing your hotel.
We understand what lenders want to know, and how to ensure all of the information is covered in your business plan. We're more than just brokers; we are a knowledgeable team of experts who work alongside hoteliers to apply for and secure finance that meets your needs.
Refinancing should aim to improve your financial position by providing you with better terms or finance features that help you work towards your future business goals.
Speak to Rangewell today to find out whether it's time to refinance your hotel loans.
Debt consolidation for hotels
One reason to refinance is to consolidate debt. This is particularly common for businesses that have taken out several different finance products, particularly on a short term basis such bridging loans.
During the pandemic, many hotel businesses struggled with cash flow as guests were no longer able to visit but there were still significant outgoings, such as utility bills and staff wages. Government funding only stretched so far for hotel investors and owners, so many of them turned to short term finance products to cover the necessary costs of keeping the business in the black.
Why consolidate debt?
Reduce outgoings: If you have large monthly payments on high-interest rates then you might find it hard to pay your current finance, so debt consolidation can help to reduce the payments and either improve the terms or spread payments across a longer period of time.
Release funds: By exchanging your current arrangement for better terms, you can improve cash flow and release funds to invest in your hotel development plans.
Reduce monthly payments: One of the main reasons why hoteliers choose to refinance is to reduce and consolidate debt into more affordable monthly payments.
Benefit from better terms: Particularly important if you took out finance during the pandemic, you may now be able to access lower interest rates from different lenders.
Prolong repayment period: Give yourself longer to repay debt
Access additional funds: By consolidating your debt into smaller monthly payments, you may now be able to afford additional finance to help achieve your business goals.
Whatever your reason for refinancing, make sure you have the experts on your side. Speak to Rangewell today about whether debt consolidation is right for you and to kick-start the refinancing process.
When to refinance your hotel
There are many reasons why a hotel owner may choose to refinance. Here are some of the common scenarios in which refinancing can be beneficial to hoteliers:
1. You find debt repayment is impacting the daily operations and growth plans for your business
2. You took out finance during turbulent economic times and settled for less-than-ideal rates
3. You plan to raise additional funds to invest in your business. For example, you are hoping to refurbish or invest in another property to add to your portfolio.
To find out whether refinancing is the right option for you at this current time, get in touch with Rangewell today, and we will take a look at your finance stack as a whole and help you figure out the best next steps for your business.
Hotel refinancing and debt consolidation with Rangewell
You don't need to wait until you are in a critical situation to consider refinancing your hotel. In fact, refinancing sooner can help businesses to reduce the pressure of existing debt and even release cash for further investment and growth.
As every hotel is different, so is its financial situation. Knowing when and how to refinance can be difficult, and choosing the right finance product to suit your needs is also a complex decision for any hotel owner in the current market.
At Rangewell, we work with hotel developers and owners in every stage of the finance process, including the application process. As an independent broker, we have access to the whole of market, so we can pair you with a lender who can support you both now and in the future.
Want to find out more about refinancing your hotel? Get in touch with Rangewell today to start your application today.