Hospitality sector walks tightrope

Jessica SarterCommercial Lending

The hotel industry is hoping that recent improvements in business financing will reach their market but owners are remaining skeptical.

In certain parts of the country, the hospitality industry is experiencing a boon. The Boston area saw a boost in hotel revenue in April thanks to two new openings and a large number of high-attendance public events. Philadelphia is making way for a new hotel under the Hilton franchise, and Holiday Inn is beginning construction on their tallest hotel in New York City. Those looking to get franchise financing or a business loan for their own hotel venture can use an online marketplace like Boefly to get them started while the market continues to expand.

In some areas, though, hospitality is taking a more cautious route. New Orleans' French Quarter may be facing a district-wide tax hike thanks to their big events and successful tourism industry. Marriott's Hawaii location was recently valued at less than its overall debt, leading hotel loan holder Goldman Sachs to enter into extension talks to keep the property going. In the state of Virginia and the city of San Francisco, hotels may be seeing a 2 percent tax hike on individual room rates by the end of the year as well.

According to Nitin Shah, chairman of Embassy National Bank, hoteliers are seeking business financing but are running into too much red tape from the FDIC, who they claim treat the hotel industry unfairly in their business classification process. Owners are also afraid that the upcoming election won't sway in favor of the lodging industry, or that consumer confidence won't last through the end of the year as predicted.