Do your clients' loan packages have "room" for improvement?

Fact: The industry average occupancy rate for hotels and motels is 60%. (First Research)

Suppose one of your customers who owns a hotel wants to expand and requests a loan to add 10 rooms. This customer has repaid his loans in the past and his financials look good. However, given overall economic conditions, wouldn't you feel more comfortable approving this loan if your customer had industry information and research to substantiate his expected demand, plus sound marketing and management plans?

Here are questions the Arkansas Small Business and Technology and Development Center can help your client answer:

1. Have you appropriately identified your target market? According to ASBTDC's market research resources, on average in the hotel/motel industry, business customers comprise 45% of sales while tourists represent 55%. Demand for lodging is closely related to personal income and corporate profits. Occupancy rates are expected to remain flat in 2010 and are forecasted to grow by 2% in 2011.

Also, since two-thirds of hotels are associated with a brand, it is important for owners to differentiate their property from competitors -- yet another reason to know your customers so that you can better differentiate and attract your target group.

2. Have you adequately budgeted for future renovations? Lodging facilities that do not budget for necessary upgrades or refurbishments find that customers go elsewhere when the accommodations start to show wear and tear. It is critical that any hotel, motel, or bed-and-breakfast develop a renovation plan and budget accordingly.

3. Finally, are you savvy about online marketing? The Internet is increasingly more important for attracting guests. Is your website optimized to receive traffic through search engines? Is it mobile ready? Are you using social media and Google Place?

If these are questions your customers need help answering for a loan package, please refer them to the Arkansas Small Business and Technology Development Center. ASBTDC's market research can pinpoint target markets, and our consulting staff can assist with financial projections, cash flow analysis and budgeting. ASBTDC seminars teach small businesses how to develop and implement online marketing strategies.

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