Enaa Mari
The hotels and lodging industry in the United States has been experiencing decent growth in recent months. The profitability of the industry can vary depending on various factors such as location, size, market segment, and management efficiency.
The size of the US hotel industry was estimated at around $ 185 billion in 2019, just before the pandemic, which blew out more than half the value of the industry. Ever since then, the industry managed to grow steadily but is yet to cross the pre-pandemic market size.
Depending on where you find your business in this badly battered industry in its re-growth phase, you would have to try not just to match the industry growth rate but do better.
That doesn’t happen easily, especially in the current situation wherein all businesses, not just your industry but across all industries, are trying to find ways to get going on their own.
That’s anything but easy to do, but with lending companies like Direct Lenders Funding, it is a lot easier to meet most of the challenges and barriers to smooth operations and growth.
Profitability in the hotel industry can be measured by metrics such as gross operating profit per available room (GOPPAR) and net operating income (NOI). The GOPPAR for US hotels increased by 2.9%, while the NOI for US hotels increased by 1.7% in 2019.
Challenges faced by the hotel and lodging industry
Post-pandemic, the economic downturn has led to decreased demand for travel, and this has impacted the growth of the hotel and lodging industry adversely.
The US hotel and lodging industry faces several growth challenges that you would be aware of, but have you figured out ways to tackle all of these?
The industry faces intense competition from online aggregators that provide a cheaper and more convenient alternative for travelers. How you adjust to this new reality is what will decide your future in the industry.
Changing consumer preferences is a tricky barrier as they are increasingly looking for more personalized and unique vacation experiences. This is a serious challenge for hotel and lodging businesses that offer standardized services.
Your business must keep up with the latest technology to remain competitive and meet the changing expectations of consumers. This includes implementing mobile check-in and keyless entry systems, as well as providing high-speed internet access and other technological amenities.
The cost of labor can be a significant challenge for your business, particularly if your hotel or lodge is located in urban areas where wages are higher. However, you can overcome cash flow uncertainties if you apply for funding from a reliable lender on time.
There are serious regulatory challenges that you need to overcome as the industry is subject to a wide range of regulations and laws. These can vary by state and locality, and compliance with these regulations can be both expensive and time-consuming.
Environmental compliance is another area where you are going to face serious barriers. The industry is also under pressure to adopt more sustainable practices and reduce its carbon footprint. This can require significant investments in new technology and infrastructure.
Overcoming growth challenges with effective funding
Dealing with barriers and challenges means additional expenditure in setting up proper systems, processes, and infrastructure, which is not possible with the cash savings in your hand.
Take booking aggregation, for example. It might appear to be a simple mobile web application, but making it functional and super efficient for millions of users across the world requires advanced technology.
Rights to such technology as well as the experts who will develop such an app, are quite expensive. That’s not all, it will also add to your overhead as you will need to sign up a vendor for regular maintenance.
If you have been able to sustain your business thus far with standardized services, it may not remain so forever.
Customer preferences and how your competitors respond to that will determine whether you will be able to continue without upgrading your services.
Not trying to grow your business is not an option because that could make you redundant even before you realize it. So, don’t wait for such an eventuality and adopt a growth strategy.
This essentially means that you need to look for opportunities to grow and expand your business. That can happen in two ways – expand capacity in your existing property or take up a new property.
Expansion in the hotel and lodging industry means new and additional lodging space either in an existing or in a new location.
That requires substantial amounts of money, which most businesses cannot pay on their own. You could look for corporate loans from reliable lenders who offer easier terms and reasonable costs of borrowing.
Manage crisis situations with fast and easy funding
Growth opportunities should not be lost in case of a shortfall in your cash balance because there are enough funding opportunities if you care to look around.
In any industry, including in hotel and lodging, cash flow volatility is a normal challenge although it can vary by degrees depending on several factors.
In most cases, it doesn’t come with a prior warning, and mostly when you are not expecting any such disruption. The situation could be anything from a payday cash shortfall to a utility bill due date expiring within a couple of days and many other tricky situations.
Such challenges are certainly not normal, but neither should you get unnecessarily alarmed by these situations. All you need is a reliable source of credit from where you can get fast and easy cash advances just when you need it.
When you approach a company like Direct Lenders Funding for such crisis cash requirements or for any other requirement, including growth opportunities, you will get a fair deal.
A reliable lender is one who is flexible with their terms and conditions of lending and also offers a low cost of borrowing. Most importantly, they would be focused more on lending on merit through a fair appraisal of your loan application. For small businesses and for small loan amounts, such a lender would not create unnecessary barriers like collateral and credit history.
