Hotel and tourism business Investments include many stages, from concept development and the decision to build a hotel, through obtaining permits to construction, commissioning and certification. Long-term investments for tourism and hotels project takes at least 2-3 years.
Lenders, investors and initiators of a hotel project seek to enter the business on the most favorable and safe terms, including minimizing any project restrictions and credit risks. It is obvious that a comprehensive professional study of the project and complete mutual understanding between the participants lay the foundation for making successful investment decisions.
Viola Funding Limited offers long-term financing and investments for the construction of hotels and tourism around the world.
We also provides a full range of services in the field of project finance, investment and long-term loans in the field of engineering and technology.
Basics for long-term investments for tourism and hotel projects
The structure of financing projects of hotels and tourist complexes can be quite diverse, depending on the type of project, its goals, risk level, financial needs and other factors.
In essence, this means the establishment of a new legal entity (Special Purpose Vehicle, SPV), which will have its own assets, independently settle accounts with creditors, and be fully responsible for project debts.
Another way to reduce credit risk is to provide a so-called balloon loan. A balloon loan is usually issued for half the term of an investment loan. If a company applies for an investment loan with a maturity of 12 years, the applicant can receive a balloon loan with a 6-year financing period.
However, there are more profitable schemes for financing hotel projects, allowing companies to raise large funds with an initial contribution of the initiator at the level of 10%. To find out more, contact Viola Funding Limited.
Funding cost and efficiency of a hotel project
The expected rate of return on equity is higher than the cost of debt because business owners expect above average returns on their capital. Returns at the level of the cost of borrowed funds with a high level of business risk would probably not satisfy project initiators.
The structure of investment financing determines the cost of capital.
This cost will include the cost of the loan specified in the agreement, the expected rate of return on equity (ROE) and the expected rate of return on capital obtained from alternative sources (eg venture capital funds).
Therefore, in the structure of financing hotel projects, the ratio of various sources of capital, depending on its cost, is important.
Hotel and tourism investment, management and operation
Hotels are real estate that can be the object of investment by various economic entities, from hotel operators to large investors focused on real estate.
As an investment property, apart from capital, hotels require a highly skilled team to manage and operate. This greatly differentiates hotels from other commercial properties, such as offices, where management does not exist or is within the reach of any small company or even individual.
Investor-operator relationships are often the subject of business analysis and consulting and lead to numerous real estate investments and sales transactions.
If you are looking for the optimal model for your investment project, please contact our team for advice.
Viola Funding Limited offers hotel business financing and long-term loans for tourism and travel projects. We organize advanced project finance schemes for the construction of large hotels and resorts, as well as provide comprehensive professional support for our clients at all stages of the project.
Investment consulting services in hotel business financing
In developing countries, banks do not have up-to-date data on brands, locations, types of hotels and other niches. Therefore, in their financial projections, lenders refer to the situation in the industry as a whole. The goal of the project initiator is to convince the bank of the credibility of its plan.
The lifetime of investment projects in the hotel business reaches 35-40 years or more, depending on the type of project. During this period, the hotel is undergoing renovation and modernization, but those gross mistakes that could have been made at the stage of planning / implementing an investment project are extremely difficult to correct.
Viola Funding Limited is ready to offer flexible personalized solutions for large companies, including industrial and commercial loan, Industrial and Commercial loans for all sectors of economy.