Everywhere we turn, headlines tell the troubles of the economy. The hotel industry is in a severe recession and facing increased headwinds from consumers focused on personal savings and business travelers under fire from government and the media. Unlike previous downturns when the industry was buoyed by resilient demand that snapped back more quickly, the industry also faces new supply absorption challenges on top of the demand fall-off. Does this mean hoteliers with plans for growth need to hold tight and wait for a rebound in 2010 or beyond? Not necessarily.

While the financial landscape is dramatically altered, and the scrutiny and standards hotel loans are facing are significantly more rigorous than in the past, the lending industry is still providing financing for those with proven track records and strong business plans. Securing a loan in today’s market requires more work on both sides of the deal, by lender and borrower. To secure a loan today, you need to show why your business plan is a solid investment and can succeed in spite of a sustained economic downturn.

Do your homework and prepare. Now more than ever, lenders want to see a verifiable history of your strength and leadership as an owner/operator. Come to the table with a well-thought story of what makes your business work. Educate your lender with detailed financials highlighting historical performance on the subject property. Providing a forecast for occupancy, ADR and RevPAR that is consistent with the current tough operating environment could give lenders a more comprehensive picture of your sustainability.

Prepare an information package that rationalizes your plans for growth—from assessing local demand drivers to competition to marketing strategy. Gain expertise about the balance of supply and demand in the region and the background about how the local market fares relative to the broader economy.

You should consider developing a plan to keep “heads in beds” and a strategy to over-penetrate RevPAR. Communicate your hotel’s value proposition: How does the flag you’ve selected differentiate you in the market? Set yourself apart from your competition and define your points of distinction to your lenders.

Focus on operations and customers. With fewer leisure and business travelers staying in hotels, occupancy remains under pressure, making operational efficiency paramount. That’s why a cost contingency plan is an effective tool to demonstrate your stability in the event of a sustained downturn. Make sure your “Plan B” is well thought out, and share your cost-out alternative strategies with your potential lenders.

Another area of cost efficiency gains can be found by examining your variable energy costs. Adopting some tactical “green” initiatives may translate into more green for your bottom line. A well-planned and executed energy audit may identify modest investments using cost-saving technology, such as updated HVAC and electric systems or more efficient light bulbs, which can save on operating costs.

As customer behavior changes, successful owner/operators are changing with them. Are you tracking how and adapting to behavior changes you’ve seen in your guests? Proactive hoteliers are employing innovative promotions to maintain rate integrity and still drive occupancy. A lender wants to see that you know your customers, and your plan to maintain loyalty and repeat business. Customer service is more pivotal than ever as guests are traveling less frequently and expect higher standards in service. Leverage loyalty or rewards programs to the fullest extent to ensure your guests stay connected to your brand and feel appreciated.

Be open, flexible and patient. Tighter lending at higher costs is a reality in today’s radically altered financial landscape. Underwriting today requires greater rigor and analysis of the relevant facts, given the economic instability. Capitalization rates continue to fluctuate, making valuations more difficult to calculate now and in the future.

The economy is finding a new equilibrium. Because of the current uncertainty in the market, everyone—from lenders to owners to consumers—is cautious. Opportunities still exist. Deals are out there, but it takes longer to find ones that make economic sense for your business. If the best deal for your business isn’t immediately apparent, be patient, and focus on ways to make your business more appealing to lenders in the future.

Mike Dolan is senior vice president and sales manager for GE Capital Solutions, Franchise Finance. Based in Bellevue, WA, he is responsible for leading a team responsible for providing senior debt to the limited-service hotel space. Reach him at mike.dolan@ge.com or (425) 451-1728. The opinions expressed herein are solely of the individual author and are not meant to represent the opinions, or the official position, of GE Capital Solutions, Franchise Finance or its affiliates.