It is certainly not news to anyone that we have been delivered a massive blow to the global hotel industry due to the rapid progression of the coronavirus (COVID-19) crisis, and the impact that subsequent travel restrictions and widespread temporary closures have had on many hotels and resorts worldwide. On the heels of an already flattening market and recession rumors that have been hotly debated for months, market conditions have changed rapidly due to the unprecedented developments, and a downturn is now beyond denial. Even as hotel industry leaders in the U.S. appeal to Washington for assistance, hoteliers and investors are understandably scrambling to come up with their own survival tactics that can better position their organizations to weather the crisis; and there is still a great deal of uncertainty regarding how long this cycle will last.
Now more than ever, it is important that the hotel industry continue to come together to take care of our own and do our part to support and encourage each other for the long-term financial health of our industry. As a direct, full-service specialty lender focused exclusively on the hospitality market, Access Point Financial (APF) is uniquely positioned to use our industry experience and expertise, as well as our financial resources and diverse portfolio of services, to be of assistance to borrowers, who may find themselves facing financial challenges. We understand the concern and uncertainty that hoteliers may be experiencing at this time, and are committed to being responsive to the needs of our customers as the situation evolves.
With a portfolio of services that includes a comprehensive, full-service lending and advisory platform, we provide a variety of financing options, and are currently in the process of augmenting this offering to meet the need for increased flexibility. Our ability to make decisions and close loans in a relatively short period of time also benefits hoteliers in making time-sensitive decisions, which could make a significant difference during times of adversity. With that in mind, we would like to offer several tips to hoteliers in working with their lenders over the coming months.
First of all, communicate your situation openly with all stakeholders, including your lender, attorney, and CPA, as well as hotel franchisors and third-party management companies. In making any requests, convey a willingness to be flexible and be open to their recommendations. If you’re experiencing financial hardship, pick up the phone and speak with them directly or draft a letter to request a modification of loan terms or to defer monthly loan payments. This means that any skipped mortgage payments would be added onto the back end of the loan, but can provide much-needed relief in the short term.
You may also want to consider refinancing the debt on your property if you do not have a substantial prepayment penalty; or at the very least, discuss your situation with a lending partner and see if there is equity in your property that you could potentially capitalize on by refinancing. In a stable lending environment, hoteliers may refinance their properties(s) after a few years to recoup equity so that they can purchase or develop more hotels. In the aftermath of the COVID-19 crisis, owners may be able to use this strategic financing option in a different way to fund critical operations during this period or to consolidate debt. However, hoteliers should be aware that many lenders are pulling back on hotel financing in the near term, due to the state of the economy and the ongoing pandemic.
Hotel owners have many other options at their disposal, as well, such as seeking a business line of credit, working capital loan, or bridge loan. These are all valid loan types and there are various other lending program options to consider. Regardless of your financial strategy, it should be thoroughly reviewed with your lender, as well as your attorney and CPA to quantify all costs and payback terms, to make sure it is the right move for your company and your property.
For more information on Access Point Financial’s comprehensive portfolio of hospitality-focused financial services or to see how we can be of assistance, please visit www.accesspointfinancial.com. We are here for you and look forward to working with you for a healthier and more successful future.