An article from Quarryhollow Commercial Capital in Sheridan, Wyoming on funding a hotel or motel renovation without refinancing the property: how to split the project, phase it, size the cash gap and compare offers, with Sheridan County lodging counts and an invented example.
Splitting a Hotel Renovation into Fundable Pieces
A renovation is several purchases with different lives. Beds, case goods, televisions and laundry machines are equipment with resale value, and an equipment agreement can fund them over their useful life. Bathrooms, flooring and wall work are construction, and a term loan fits them. The weeks when rooms are out of service are a cash gap, and a credit line or working capital covers it. Funding each piece on its own terms keeps the mortgage untouched.
Business Loans for a Sheridan, WY Hotel Renovation Without Touching the Mortgage
Refinancing the property to fund a renovation resets the whole mortgage, its rate and its term. Separate renovation funding leaves the mortgage as it is and adds payments sized to the project. Which costs less depends on the existing mortgage; compare both in total dollars. Quarryhollow does not arrange real estate loans or refinancing; it passes requests for the renovation pieces to funding partners.
Hotel and Motel Employers in Sheridan County, WY in 2023
County Business Patterns counted 28 traveler accommodation employers in Sheridan County, WY in 2023, with 231 employees and $6.2 million in annual payroll; 12 had fewer than five employees. Hotels and motels proper (NAICS 721110) numbered 27. Counted under a separate Census program, Nonemployer Statistics, the county also had 62 lodging businesses with no payroll in 2024.
An Invented Room Refresh, Priced and Financed
Illustration only, invented figures: a 24-room motel replaces furniture, fixtures and equipment at an invented $6,500 per room, $156,000 in all (our arithmetic). Financed over 60 months at an invented annual rate of 9%, the payment is about $3,238.30 a month, or about $134.93 per room per month. That per-room figure is the number to set against a higher room rate, fewer complaints or lower maintenance after the refresh.
How to Finance a Hotel Renovation in Phases in Sheridan, WY
Renovating one floor or wing at a time keeps the rest of the hotel open and spreads the cost. Funding can follow the phases: one equipment agreement per phase, or a term loan with staged draws if a funder offers that. Phasing also lets the owner check results from the first rooms before committing to the rest.
Paying for Hotel Upgrades from Operating Cash or Financing in Sheridan County, WY
Paying cash avoids interest but drains the reserve a hotel needs for payroll and repairs. Financing keeps the reserve but adds a payment. A middle path is paying cash for small items and financing the large furniture package. Whatever the mix, keep enough cash on hand to cover several weeks of payroll and utilities while rooms are offline.
Property Improvement Plans and Brand Deadlines
A franchised hotel can receive a property improvement plan (PIP) listing required upgrades with deadlines. The PIP defines the scope a funder reads and the date the money is needed. Send it with the request, along with contractor bids and furniture quotes for each item.
A Checklist Before a Sheridan, WY Hotel Signs Renovation Funding
- Bids and quotes for each piece: furniture, construction, equipment.
- Which pieces go on equipment financing and which on a term loan.
- The number of rooms offline per phase and the cash gap it creates.
- Total dollars paid on each agreement.
- Any brand approval or lender consent the mortgage requires.
Records a Partner Reads for a Hotel Renovation Request
Recent bank and card processing statements, the latest tax return, occupancy and average daily rate reports, the PIP if there is one, and the bids. A hotel with steady occupancy history makes the strongest case that renovated rooms can carry the new payments.
Sizing the Cash Gap While Sheridan, WY Rooms Are Offline
Rooms out of service earn nothing while payroll, utilities and loan payments continue. Multiply the rooms offline by the nights they are out and by the average rate those rooms would have earned, and the result is the revenue a phase gives up. Illustration only, invented figures: 8 rooms out for 20 nights at an invented $110 average rate is $17,600 of room revenue forgone in that phase (our arithmetic). A credit line sized to that figure covers the phase.
Questions a Sheridan County, WY Hotel Can Ask Each Funder
- Can furniture from several vendors go on one agreement?
- Does the funder need the mortgage holder's consent?
- Can the term loan be drawn in stages as phases finish?
- Can the furniture agreement be paid off early without a charge?
- Who insures the financed furniture and equipment?
Where to Read More on Sheridan, WY Hotel Funding
Hotel loans in Sheridan, WY covers lender types and motel options; business term loans covers construction funding; and equipment financing covers furniture, fixtures and equipment by item.
By Quarryhollow Commercial Capital · Updated
