How to start a guest house business

Running a guest house cannot only be extremely profitable, but it is also a life-long dream for many people. And, with more of us holidaying in the UK, there’s never been a better time to start a guest house business.

Although exciting, establishing any business can be incredibly daunting. So, before you start your guest house business, it’s important that you familiarise yourself with the process.

Is running a guest house for you?

First and foremost, you should ask yourself whether or not this is the right decision for you. After all, running a guest house is a huge commitment and it’s important that you understand what to expect from the role. You should spend some time researching the market to determine whether or not there is a gap, or demand, for what you plan to offer.

Find a property

To run a guest house, you’ll of course need to have the house itself. Think about where you want to set up your guest house business –  location is everything and it’s important you set up your business in a place that people want to visit.

Many people choose to buy an existing guesthouse as it will be all set up and ready to go, rather than having to convert a property.

Research the market

It’s important to consider the market to ensure there is a demand for your offering. Is there a demand for a guesthouse in the area? Who is likely to stay at your guesthouse? What services and amenities will they be looking for?

Develop a business plan

The next step to starting a guest house is to develop a business plan. A business plan is vital when it comes to starting a guest house, as it will outline the measures you will need to take to make your business a success. It’s also important if you are making a credit application to obtain funding for your guest house. If you’re applying for a commercial mortgage, for example, your lender will also ask to see a business plan.

Having a sound business plan will help to keep you on track when it comes to achieving your business goals and, of course, it will also give you a clear indication into operating costs.

Generating interest in your guesthouse

If you’re starting a guest house from scratch, you will need to start by drumming up as much interest as possible in your new business venture.

You can do this by…

  • Investing in a website showcasing your guest house – integrating a booking system within your website is also a great idea.
  • Create a customer database from the offset.
  • Hire a marketing team to design a powerful logo and any other marketing materials you might need.
  • Advertise using all available platforms.

Ensure you meet regulations

If you are starting a guest house in the UK, you will need to comply with all fire safety laws and legalities. If you are altering a property or building a guest house from scratch, you will also need to obtain planning permission.

Why choose Stewart Hindley for your guest house finance?

If you’re considering buying a commercial property such as guest house, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding guest house commercial mortgages.

How to find a good location for a bed and breakfast business

Choosing the right location for a bed and breakfast is an incredibly important decision. After all, it can make or break your business.

The right location for your B&B depends on the vision you have for your venture, your target market, and your own personal preferences. When you’re looking for a good location, you should also think about local amenities, whether the location is attractive to potential customers, as well as the property’s proximity to landmarks and attractions.

Here’s our guide to everything you should consider when looking for a good location for your bed and breakfast business.

The location’s USPs

What makes the location unique and special for choosing to run a bed and breakfast? Why would it appeal to guests?

Think about the amenities in the area, transport links, and things to do and see. Are there landmarks that offer guests a unique experience, exciting activities, or restaurants nearby?

Cater to your target market

When choosing a location for your B&B, you should ensure that you are able to cater for your specific target market.

For example, if you are reaching out to families, the area should not only be accessible by different transport links, but you should also look out for family friendly activities, amusement parks, nature reserves, and other attractions.

On the other hand, if you’re catering for young professionals in a city centre location, you should consider bars, restaurants, spa days, landmarks, shopping facilities, and any popular events or festivals that take place in the area.

And make sure there are activities for your target market to enjoy all year round – you want to attract guests 12 months of the year, not just around a certain date or event.

Has the area got a good reputation?

You can get a good feel for an area by walking around speaking to other residents and business owners. Asking simple questions about the area’s footfall, crime statistics, what type of people visit the area, as well as the area’s reputation can give you a good insight into whether it would be safe and attractive for guests.

Competition from other accommodation

When considering a location for your B&B, look for competition in the area. Starting a bed and breakfast in an area without lots of other hotels and guest houses could be a good call as the competition will be minimum. However, it’s also important to consider why there are no other similar businesses in the area – is there no demand?

Is location everything?

Location is incredibly important when searching for the perfect B&B. After all, you could stumble across the most perfect bed and breakfast. But if the location isn’t right or fails to impress your guests, you won’t generate enough bookings.

People want a reason to visit an area and what an area has to offer can really enhance your marketing efforts, optimise sales and inspire people to book and stay with you.

Why choose Stewart Hindley for your B&B finance?

If you’re considering buying a commercial property, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial bed and breakfast mortgages.

Book yourself onto a Bed & Breakfast course and kick start your dream.

If you’ve been thinking about owning your own bed and breakfast or guest house, why not take that step forward towards your dream and book yourself onto a bed and breakfast training course.

A Bed & Breakfast training course will help you decide whether or not this is the right decision for you as owning and running a bed & breakfast can be very rewarding but also challenging.

Karen Thorne at the Bed & Breakfast Academy is an experienced B&B owner having set up her own stunning B&B in Shropshire in 2004. Karen gives endless practical advice, built from years of running her B&B but also from her previous career in marketing.

The course covers everything you need to know from how to set up, run and market a successful Bed and Breakfast to fire and health & safety plus all the food awareness you need to have!

You can become part of an amazing supportive B&B community that Karen has developed with her wealth of knowledge and she is always there for that extra advice when needed. As a consequence, we cannot recommend Karen’s courses highly enough!

Also, lenders look favourably on applicants who have attended courses as it shows commitment to their plans and that they understand what is involved in running a successful B&B!

Why not take a look at Karen’s website www.bandbacademy.co.uk and sign up today!

How much deposit will I need to buy a Bed & Breakfast, Guest House or Hotel?

Deposits for commercial mortgages higher

Raising a deposit for a B&B, Guest House or Hotel can be challenging at the best of times, let alone in the height of a global pandemic when lending sentiment is risk adverse.

Unlike residential mortgages where a deposit can be as little as 5% of the purchase price, commercial mortgages require a higher deposit contribution which is typically 35% to 40% of the purchase price, dependent on the lender’s appetite.

In addition to the capital required for your deposit, there will be other costs to consider such as SDLT (Stamp Duty), Valuation Fees, Solicitors Fees and Broker Fees.

Don’t forget extra costs

As a rule of thumb, when you are considering purchasing a B&B, Guest House or Hotel, you’ll need to make an allowance of circa 47% of the purchase price, as your total capital contribution, which will include all costs such as SDLT, and then you won’t go far wrong.

As with all purchase considerations, there is generally a deal to be done at a 10% discount or more off the vendors’ guide price, so don’t always limit your search to your budget.

Contact us for help with your commercial mortgage

For more advice on how we at Stewart Hindley can help you achieve your life style business, with commercial mortgage solutions for bed and breakfast, guest house and hotel purchasers, offering the best terms and lowest capital contribution, then don’t hesitate to get in touch for no obligation, impartial advice.

 

How to buy a hotel

For many people, owning their own hotel is a life-long dream. A dream that can bring much fulfilment, new opportunities, and happiness.

However, when it comes to tapping into the hotel sector, there are a range of factors you need to consider and addresses before buying a hotel, and during the purchasing process.

Here’s our guide to buying a hotel.

 

What type of mortgage do you need to buy a hotel?

 

If you’re considering buying a hotel, renovating a hotel, or expanding any commercial property, you will need to apply for a commercial mortgage.

Many lenders offer a variety of commercial mortgage deals, with the majority available as fixed and variable-rate loans. You should always shop around to find the best deal and keep in mind that most commercial mortgages have a repayment span from one to 25 years.

 

What deposit do you need to purchase a hotel?

 

Deposits for commercial properties such as hotels are generally 30 or 40 percent of the total value of the property – a lot higher than residential properties.

The amount you can borrow will depend on a number of different factors, including:

 

  • The price of the hotel
  • The type of hotel
  • How much deposit you have
  • Current market conditions
  • Your credit score and financial situation

 

Whether you are eligible to purchase a hotel, will depend on the above factors and whether or not you meet the criteria set out by the lender you choose. Ultimately, it comes down to how much of a risk you are financially and whether you are in a sound financial position to be able to pay back the money you have borrowed.

 

Applying for a mortgage for a hotel – what do I need?

 

When applying for a mortgage for a hotel, you will be required to complete the relevant paperwork and also supply a sound business plan. During the process, you will be asked questions relating to your business and financial situation so that lenders can understand how you intend to pay back your loan. An affordability check will then be completed and you will receive an agreement in principle.

 

 

Why choose Stewart Hindley?

 

If you’re considering buying a hotel, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you.

 

 Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding hotel finance or commercial mortgages.

Staycations to dominate the UK hospitality sector

UK hotels to benefit from staycation surge

A staycation surge is expected in 2021 across the UK due to ongoing international travel restrictions and successful domestic vaccine rollouts. This presents a promising opportunity for UK hoteliers to attract people who would previously have chosen to travel abroad for holidays and weekend breaks.

Domestic travel received 70% of hotel clicks on TripAdvisor in January 2021, where the summer months proved to be the most popular for bookings.  VisitBritain predicts a recovery of £61.7 billion in domestic tourism spend in 2021, up by a staggering 79% compared to 2020.

VisitBritain’s October 2020 survey also suggested a 33% increase in domestic interest in short stay UK breaks, compared to 2020.

Glamping, holiday lets, caravan and camping searches at a high

Many travellers are turning to both weekly and weekend holidays across the UK’s wide range of leisure parks, from touring caravan sites to seaside static caravan parks, and from countryside lodges to mountain “glamping”. A turning point for many was when self-contained and self-catered accommodation was allowed to re-open to family bubbles from 12 April 2021 a full month earlier than traditional hotels.

Looking at Google search trends, the topics ‘glamping’, ‘holiday lets’, ‘caravan’ and ‘camping’ have all seen a record number of searches during the pandemic and are expected to increase even further in 2021, especially during the warmer months.

How easy is it to get the hospitality finance you need?

The last year has been very challenging due to the pandemic resulting in reduced appetite and lower LTV’s, however at Stewart Hindley, we have successfully completed numerous cases where prospective purchasers have either had their loan applications declined via other non-specialist Finance Brokers, or they assumed because they had a good relationship with their bank, they would get their loan application approved, unfortunately more often than not this is not the case.

Why use a specialist hospitality finance broker?

By engaging with a specialist hospitality finance broker, such as Stewart Hindley & Partners, you can be assured that if there is a deal to be done, we at Stewart Hindley will get it done in the shortest time possible on the best rates and terms given the for the prospective purchaser with an assured and timely outcome.

But don’t just take our word for it – visit our website to view some of our many clients’ finance testimonials.

To have an initial discussion with us, please get in touch on 01488 684834.  We look forward to hearing from you!

Turned down by the bank for a commercial loan – what next?

Who do you turn to when your bank says no?

If you are reading this blog right now, then it is very likely that you’ve been declined by the lender you have approached, or your search for a suitable commercial mortgage wasn’t successful.

Finding a commercial mortgage to realise your dream of buying your own Guest House or Bed and Breakfast can be a complex and time-consuming process and your chances of being successful with your own loan application are marginal to say the least, especially when hotels, guest houses and bed & breakfasts have all but been closed for the last 12 months.

So, the question is, how can how confident can I be that once I’ve made an offer to purchase a Guest House or Bed & Breakfast, that I can secure a commercial mortgage on the most competitive terms in the short time possible, and convincing the sales agent and ultimately the vendor that I’m a credible purchaser.

The first step would be to engage with a firm of specialist brokers such as Stewart Hindley & Partners who specialise in guest house and bed & breakfast finance who’ll provide you with a lenders in-principle decision within 48 hours.

Assuming a positive result, this will then give you the confidence to make an offer via the sales agent that should be made subject to valuation and finance which is the norm when purchasing a guest house or bed & breakfast.

Once your offer has been accepted, Stewart Hindley will then review the trading accounts and  present a full business plan and undertake all the lenders due diligence to facilitate a formal loan application  to ensure a satisfactory and timely outcome, whilst providing regular up-dates to the sales agent, who in-turn will be able to fully support your offer to the vendor, on the basis of Stewart Hindley’s track record of providing guest house and bed & breakfast finance solutions.

In summary, when searching for a commercial loan for a guest house or bed & breakfast don’t be tempted by headline rate and loan to values as these are often seen as attention grabbers when in reality it is never about borrowing the money it’s all about managing the lenders’ risk and trading expectations.

For further information on how we at Stewart Hindley can help you with your guest house and bed & breakfast financing go to our web site www.stewarthindley.co.uk and review our case studies.

Remember, we can provide you with a lenders’ in-principle decision within 48 hours so you can proceed with confidence in a particularly challenging market.

What is asset financing?

Asset financing is a type of loan designed to enable the purchase of high-value items or resources on behalf of a business. These items or resources are known as assets.

Taking out asset finance makes it possible for a business to secure the assets it needs and pay for them gradually over time through fixed repayments, making asset financing good for cash flow and achieving business growth. Asset financing may also involve a business using an asset it already owns as security against a loan to boost working capital.

A business of any size can make use of asset financing, as long as it can meet the criteria required to secure the loan.

What counts as an asset?

In business terms, an asset is an item of value that provides business benefits. All businesses need assets to carry out operations or generate an income, and may secure assets by purchasing or leasing them.

Examples of business assets include buildings, vehicles, IT equipment, inventory and raw materials.

Types of asset finance

The two main types of asset financing are Hire Purchase and Leasing. Both involve borrowing funds from an asset finance provider to procure a business asset, but differ with relation to what happens to the asset after the loan term.

Once a Hire Purchase asset financing agreement is settled, the asset either automatically becomes the property of the business or they will have the option to pay a final payment and own it outright.

Conversely, at the end of most Leasing asset financing agreements, there is no option for the business to purchase the asset and keep it, although Stewart Hindley is proud to be different. We offer our leasing customers the chance to own their leased assets outright via a process called passing title, for a fee agreed at the start of the loan term.

Why asset financing?

There are many benefits to asset finance for businesses. Many opt for asset finance so that they can spread the cost of large outlays, stay in control of cash flow and put working capital back into the enterprise itself, rather than investing in assets upfront. There’s also no need to provide extra loan security, since the asset itself acts as security.

Asset financing loans can run up to a maximum term of seven years and the repayments are fixed, so a business can budget exactly with no danger of hidden costs. Interest rates for asset finance tend to be lower than those associated with other forms of lending too.

If you’re ready to find out more about asset finance for your business, get in touch with us today.

Bed & Breakfast Finance Going Forward

2020 is definitely going to be a year to remember. Life went from normal to “lockdown” overnight and hospitality businesses were closed down by the government. So does this mean that you won’t be able to buy a bed and breakfast or guest house in the future?

Of course not, what it does mean is that lenders will see the sector as a higher risk post Covid 19 and as a result loan to value ratios may change. Up until now the maximum loan a new to trade operator would have been able to secure on a bed and breakfast or guest house was 65% of the purchase price meaning you needed at least a 35% deposit plus funds to cover fees such as stamp duty, valuation etc. to be able to buy your dream property.

Going forward we are still to see how lending criteria will change but, having said that, Stewart Hindley & Partners have mainstream and specialist lenders who are still willing to lend on hospitality properties. We don’t know what society will look like after the Covid-19 pandemic has gone but one thing we do know is that many people will be looking to take more short breaks and staycations in the UK rather than travelling abroad.

Post Covid-19 could mean a boom period for bed and breakfast owners which would help them to recover from the sudden loss of their incomes and hopefully inject some confidence back into the sector.

If you are thinking about buying a bed and breakfast or guest house and need the best finance deal available to meet your circumstances speak to us here at Stewart Hindley & Partners as we are specialists in the hospitality sector and if we can’t help no one can!

Contact us today and you could have your own bed and breakfast.

CBILS Funding

CBILS Funding

Lenders are currently overwhelmed with applications and it may well take several weeks before the relevant lending manager gets to look at your case and then assess your application. At Stewart Hindley & Partners we have direct access to your local r lending or relationship managers. By using an FCA approved broker such as ourselves you can dramatically reduce the amount of time your application will take, get the best interest rate available given your circumstances and clarification of your situation in the immediate future.

Not every accredited lender can provide every type of finance available under CBILS, and the amount of finance offered varies between lenders. As “whole of market brokers” we have access to a wide range of lenders and will be able to find you a loan solution even if the prime lenders have declined to help.

Stewart Hindley & Partners will do all the work for you all you need to provide is the relevant supporting information.

The British Business Bank has a lot of information available to small businesses to help them access funds during this unprecedented time a summary of which is below.

The lender makes a decision

The lender, not the British Business Bank has the authority to decide whether to offer you finance.

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

  • they exclude the Principal Private Residence (PPR), and
  • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

 If the lender turns you down

If one lender turns you down, you can still approach other lenders within the scheme but this will be considered as “new to bank” and differing qualifying criteria may apply.

Access to the scheme has now been opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility.

You may therefore consider re-contacting your lender if you have previously been unsuccessful in securing funding.

Who is eligible

Your business must:

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

View the British Bank Quick Eligibility Checklist

https://www.british-business-bank.co.uk/wp-content/uploads/2020/04/CBILS-check-list-v10.pdf

Businesses from any sector can apply, except the following:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • Further-education establishments, if they are grant-funded
  • State-funded primary and secondary schools

View CBILS frequently asked questions for businesses

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/cbils-faqs-for-smes/

 What lenders will need from you

When you apply for a business loan, most lenders will ask you for the following:

Details of the loan

  • The amount you would like to borrow
  • What the money is for — the lender will check that it’s a suitable business purpose and the right type of finance for your needs
  • The period over which you will make the repayments — the lender will assess whether the loan is affordable for you

Supporting documents

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

Note: For many customers approaching their existing lenders for a smaller facility, the process may be automated and therefore may not require the same level of documentation.

To learn more about lenders’ requirements, see the Better Business Finance lending application checklist.

Here’s the link – https://www.british-business-bank.co.uk/wp-content/uploads/2020/04/BBF_factsheet_-_lending_application_checklist.pdf