The financing of investment and working capital in Maltese boutique hotels

Abstract

Purpose: The objectives of this study were to identify and analyse the several types and sources of finance available to boutique hotels and to evaluate the differences between the financing of boutique hotels and the financing of standard hotels. This study also strived to assess the financial strategy of boutique hotels to understand how they manage to survive in a very competitive environment. Design: Sixteen semi-structured interviews were conducted with boutique hotels’ owners, financial controllers or general managers. Interviews were also carried out with four bank representatives and a representative from Malta Enterprise. Findings: Results show that the most common source of finance for the initial investment of boutique hotels is a combination of personal funds and bank loans. Accumulated cash, trade credit and the bank overdraft are the most common sources of finance for working capital requirements. Conclusions: Boutique hotels many not always be the best economic investment. However, for many rich people, more money might not be a further source of satisfaction, and hence they might start looking at other satisfiers, such as owning a chic boutique hotel. Value: Up to the date of submission of this dissertation, there is little to no research about the financing of boutique hotels. Therefore, this study aims to fill this gap.