5 Ways Hoteliers Can Work With Their Lenders During The Pandemic
The coronavirus pandemic has strained all of commercial real estate, but hotels have been feeling acute pressure.
Without paying guests, hotels are seeing their revenues drop to historic lows. For hotel owners, maintaining effective communication with their lenders could be the difference between surviving this downturn and closing their doors for good.
“With occupancy and revenues falling to unprecedented levels, hoteliers are scrambling to explore their financial options,” said Lori Tirado, managing director of business development at Access Point Financial, an Atlanta-based hospitality lender. “At the same time, lenders are struggling to maintain communication and service timelines to assist their customers and provide viable solutions.”
Access Point has been working with its clients since the pandemic began, collaborating to develop solutions to help ease their burdens as they wait for guests to return. For hoteliers who may be struggling with how to reach out to their lenders right now, Tirado has some tips to make the process simpler and more successful for both lenders and clients.
Keep Regular, Open Communication
First, Tirado encourages borrowers to stay in regular communication with their lenders, even if that may not always be easy.
“Remember that all lenders are being inundated with requests during this period, so try to be patient and understand that you will get a response if you follow up regularly,” Tirado said.
She added that in order to make sure conversations are effective, clients need to be totally transparent with their lenders about their financial situation. Leaving out key details now will only make for more difficult conversations later.
“The more informed your lender is, the more willing they will be to provide solutions in the short term to help you successfully navigate through these challenging times,” Tirado said.
Provide As Much Information As Possible
Before clients ask their lenders for help, Tirado has some steps they can take to make it easier for their lenders to assist them. First, even if a lender does not specifically request forecasts, clients should provide them and update them regularly. This not only helps associates explain the global situation to upper management and regulators but will also show that the client is being proactive.
Second, clients can set themselves apart by being up to date with all of their other payments.
“Make sure there are no delinquencies, if possible, such as taxes and insurance, and stay current with your reporting,” Tirado said. “Everyone understands that financials will be stressed, but do not wait to submit them. This shows that you are transparent and willing to help the lender in any way possible."
Reduce Expenses Wherever Possible
Lenders want to see that clients are doing everything they can to cut back on expenses to get ahead of financial shortfalls, Tirado said. Measures clients can take include temporarily reducing payroll expenses, lowering utility bills and limiting any recurring expenses that may not be totally necessary at the moment, like garbage removal.
Tirado explained that just because hotels may not be able to attract guests at the moment doesn’t mean they have to stay vacant. Clients can show lenders that they are being proactive by looking for creative ways to fill their rooms, market their hotels and do their part to help people impacted by the current crisis.
“Consider talking with various government organizations like health departments, FEMA, the Red Cross or the CDC,” Tirado said. “These organizations could use hotel rooms for staff, people coming to assist the crisis, or for noncritical patients or people that need to self-quarantine and do not have anywhere else to go.”
Keep Your Eye On The Future
Finally, Tirado encouraged clients to think ahead when it comes to ensuring the health and safety of their guests. She explained that while branded hotels have always adhered to a high quality of cleanliness, the bar has now been raised even higher. Hotel operators will need to go above and beyond to make their guests feel comfortable and to make sure they get positive online reviews, since guests will be turning to them to help make their booking decisions now more than ever.
"We are already starting to see the industry revamping health and safety measures required to ensure guest safety in rooms and common areas," Tirado said. "Mobile room keys at hotels will also increase over the coming years, which will help people feel safer and reduce the amount of interaction needed at check-in."
She added that clients should also be focused on the long term and try to come up with innovative ideas for how they will hit the ground running when demand picks up again.
“The hospitality industry has faced downturns in the past, and it is certain that things will get better when people begin traveling again,” Tirado said. “Although guest behaviors may be affected for quite some time, there will always be a need to travel and stay in hotels.”
This feature was produced in collaboration between the Bisnow Branded Content Studio and Access Point Financial. Bisnow news staff was not involved in the production of this content.