Travel is an unavoidable part of life, although not necessarily a bad one! The hotel business is extremely lucrative, with the market growing every year since 2014. People are always moving from place to place by plane, bus, ship, train, car, and more. Quality lodging is always needed as it houses all kinds of travellers such has people on business, long-stay travellers, and those who are on vacation. There are all kinds of hotels to serve these specific markets. Fancy hotels, youth hostels, camping grounds, motels, and elder hostels are some of the types of hotels that you could decide to build. But no matter what you choose, you are going to want to make your hotel construction process as easy as possible. Here is what you need to know about building your hotel.
Build Your Team
The first thing you will need to do is bring in an expert team. This will usually be a lender, architect, and contractor who will be working together to support you through your decision-making process. Some of your decisions will involve how long the construction should take and construction financing.
What Will Financing Look Like?
The lender will usually use the SBA 504 loan program to include all costs of construction. When you choose your lender, you will be asked a number of questions. This is so the lender can check contingency, the scope of work, and any permits that might be needed. You will probably be asked questions a such as:
- Is the property you are building on zoned or sub-divided?
- What fees should be paid?
- What are the lengths of time on the zoning and permits?
- How long will the construction of the hotel take?
- Will you be hiring qualified inspectors to keep an eye on the process?
- What type of hotel is being built?
Once these questions are addressed, the lender will figure out which type of loan best suits your needs. They usually require some money upfront to look over your drawings, planning process, and issue the necessary permits. They may even add a few additional months to the project in case of any unexpected delays. Whenever it is possible, a loan should be finalized before any construction begins.
What About My Contractor?
It is important that your contractor has hotel building experience. There are specific codes and requirements they must meet for hotels. When it comes to paying your contactor, you will be asked how much retainage will be held. Retainage is a percentage of the contract that the lender holds back on each request for payment. This ensures that the contractor will meet their deadlines. Your lender will then set up a payment schedule to make sure your contractor is paid in a timely manner and your contract is being met.
With this information, now you are ready to begin a successful hotel construction!