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!

Hotel Finance Guide

When it comes to securing hotel finance and fulfilling your dreams of running a successful and profitable hotel, there are a number of different finance options available.

Running a hotel opens up a host of exciting opportunities, allowing you to provide a unique, enjoyable and comfortable stay for your guests. Running a hotel can also be profitable, providing you invest in the right things.

But, to bring the vision of your hotel to life, you’ll first need to secure the necessary finance.

What is hotel finance?

Hotel finance refers to the funds you’ll need to invest in your hotel and get your business off the ground. This type of finance is designed to support the plans you have for your hotel and provides you with the cash you need to make your business a success.

As with any type of finance, there are a number of different hotel finance options available, including commercial mortgages and business loans for hotels.

However, in order to obtain funding for your business venture, you will need to present a robust and credible business plan to your lender, along with a sound financial model, a targeted marketing plan, and feasibility reports. This will help your lender to feel confident in your ability to be able to pay the loan back.

What options are there for financing my hotel?

Commercial mortgages for hotels

Just like residential mortgages, commercial mortgages for hotels allow you to borrow the money you need to buy your hotel business and pay it back over an agreed term.

Many lenders are happy to provide commercial mortgages for hotels so it is important to shop around to find the right deal for you. This is where a commercial mortgage broker can be incredibly helpful.

Keep in mind that deposits for commercial properties are a lot higher than residential properties, with lenders usually asking for between 30 or 40 percent of the total value of the hotel.

Business loans for hotels

Business loans are another option for financing a hotel, whether you’re expanding, renovating, or just starting out.

Providing an invaluable source of income when you need it the most, business loans for hotels are available from a range of different lenders. Again, the loan that is right for you will depend on your individual financial circumstances.

Any kind of hotel business can apply for a business loan, but the rates and terms will vary depending on your circumstances. You should be aware that you will be expected to present your business plan, projections, financial forecast and more when applying for a business loan for your hotel.

Why choose Stewart Hindley for your hotel finance?

If you’re considering buying a commercial property, such as a hotel, it’s important to talk 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 mortgages for hotels.

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.

How can debt restructuring help my hotel business?

One year into the coronavirus pandemic, the European hotel industry still faces a great level of uncertainty. With several government support packages and ways of restructuring, the industry is responding differently in each country to ensure businesses can continue to be viable in the aftermath of COVID-19.

In the UK, employee furlough schemes, business loans and suspensions on evictions have allowed the industry to continue trading and prevent the detrimental effects of lockdowns. However, there are still tough times ahead for the industry and Kate Nicholls, of trade body UKHospitality, says businesses need “enhanced grant support to keep venues alive and a solution to the ongoing rent debt problem that continues to linger over the sector.”

As owners and managers of hotels are left with plummeting occupancy rates, they now need to work out how to pay debt-related obligations and keep their hotel business afloat. Debt restructuring is a strategy that can help to find suitable funding and refinancing options to ease the pressures of trading difficulties, especially during these unprecedented times.

What is debt restructuring?

Debt restructuring is a process that allows businesses experiencing financial difficulties to refinance existing debt obligations. It makes debt more manageable and can provide much-needed flexibility to businesses that need it in the short term.

How can debt restructuring help my hotel business?

If you are unable to meet your loan repayments to a commercial lender for your hotel business, you may feel under extreme pressure and your livelihood could well be at risk. A restructuring agreement can help to make your debt more manageable and ensure that once the pandemic passes, your hotel can still run effectively, and you and your employees will still have a job.

There are several ways this can be achieved but negotiating the terms of your debt payments with your lender can help you to secure positive outcomes and maintain your financial relationships.

Debt restructuring experts

Here at Stewart Hindley, we are experts in debt restructuring within the hospitality industry and will work to secure the best possible outcome for your hotel. We will help to guide you through the complete process and act on your behalf to reach a consensual agreement with your commercial lender.

Firstly, we will complete a full review of your business and negotiate with your commercial lender to agree on a recovery strategy for your hotel. We will also introduce new lenders who may be able to refinance your existing debt and achieve a repayment forbearance period whilst the restructuring takes place.

Contact Stewart Hindley today

If you’re a hotel owner or manager trying to navigate these challenging times and need experienced support and help with your business finances, please don’t hesitate to get in touch. We can look at your individual circumstances to help you secure the debt restructuring your hotel business needs.

How to get a mortgage for a bed and breakfast

Owning and running a bed and breakfast is something many of us dream of. What could be better than living in an idyllic location, running your own business and enjoying the chance to meet new people?

For those who are lucky enough to make this dream a reality, there are several practical steps to overcome – from finding the right property in the perfect location, through to securing a mortgage.

If you’re thinking of buying a B&B for the first time, here’s our guide to getting a mortgage for your dream business venture.

What type of mortgage do I need for a bed and breakfast?

When buying a B&B, you will definitely need a commercial mortgage. In some cases, if you’ll be living in the property and over 40% of the space will be used for your own residential purposes, then you’ll need a regulated commercial mortgage.

You’ll typically be expected to pay a deposit of between 30% – 40% for your commercial mortgage. The exact amount will depend on the terms of the mortgage and the level of risk involved. For first time B&B buyers, lenders will usually require a 40% deposit.

When considering your application for a commercial bed and breakfast mortgage, lenders will take into account the following:

Business plan

When you take out any commercial mortgage, the potential lender will want to see a thorough business plan, clearly demonstrating:

  • How you will run the business
  • Your long-term plans
  • Financial projections
  • Your marketing plan for ensuring high levels of occupancy

Trading history

Lenders will look at the bed and breakfast’s existing trading record and will likely want to see 3 years’ worth of accounts for the business you’re buying.

If the business you are buying does not have a strong trading record, there are still some lenders that will consider your mortgage application, if you can demonstrate that you have a comprehensive plan in place to improve profitability.

Credit history

As with any mortgage application, the lender will want to see that you have a strong credit history. There are lenders that offer bed and breakfast mortgages for those with a poor credit history. If this is the case, you will usually need to find a specialist provider, and you won’t necessarily be able to access the preferred rates.

Your experience

The lender will consider how much experience you have in the sector. Of course, experience isn’t essential, and lenders understand that many B&B buyers are moving into the industry for the first time, but any relevant industry experience will be looked upon favourably.

Speak to a specialist broker

If you’re buying a bed and breakfast, it’s well worth speaking to specialist broker with experience in securing mortgages for B&Bs. They will help you source the most competitive offers, undertake all of the work for you to include the financial business plan, revenue and cash flow projections as well as the marketing plan ,as well as handling all of the required paperwork, which will increase your chances of being approved.

To find out more about how to get a mortgage for a bed and breakfast, get in touch. Call us on 01488 684 834 or email: info@stewarthindley.co.uk.

What is hotel financing?

What is hotel finance?

Hotel financing is a type of commercial mortgage designed to fund a new hotel, guest house or B&B project or to reinvigorate or refinance an existing one. This type of finance is specifically intended to meet the particular needs of hoteliers and hospitality businesses.

While it is possible to obtain a commercial mortgage for hotel financing from a traditional bank, hotel finance is best sourced with the help of an experienced hotel finance broker with access to exclusive rates from the whole market.

The hotel and wider hospitality industry is fiercely competitive yet highly rewarding for those with the qualities lenders are seeking, so it pays to prepare an application for hotel financing with expert guidance.

How does hotel financing work?

Hotel lenders will only consider the most robust hospitality business opportunities, and there are strict criteria that govern the hotel financing application process.

Anyone seeking hotel finance, whether they are new to the industry or a seasoned hotel operator, will need to submit detailed forms regarding their hotel business and business plan, their experience in the sector, as well as their plans for the loan and how it will be repaid. While experience in the hotel trade is a definite plus when seeking hotel finance, it is entirely possible to secure a commercial mortgage for a hotel business as a new to trade hotel buyer.

In most cases, lenders will look for a deposit of 30% or more, additional security, a solid business plan, a good personal credit rating and three years of trading accounts from the loan applicant and the hotel vendor.

When a hotel financing application is made via a specialist broker like Stewart Hindley, these criteria are put to specialist lenders from across the whole market with whom the broker has established years of positive rapport. It’s the job of a hotel finance broker to not only help the applicant create the most attractive business opportunity, but to seek out the most suitable lenders on their behalf.

Securing hotel finance

At Stewart Hindley, we have refined an expert approach to assisting both experienced hoteliers and those new to the trade in securing hotel financing. Our specialist team can guide you through the complexities of building a strong hotel finance application, before identifying the best potential investors and obtaining the best market rates.

Get in touch today to find out how we can help you acquire the hotel finance you need to turn your hospitality vision into reality.

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

Business Support Finance – COVID-19

Launched in response to the coronavirus outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support UK businesses during this period of disruption. CBILS provides the lender with a Government backed guarantee of 80%, against finance offered under CBILS with the balance of risk being held by the lender.

CBILS is designed to assist with cash flow, initially by way of a Capital Repayment Holiday (Interest only period) of 12 months or a commercial loan over 6 years, with no repayments in the first 12 months followed by a 5-year loan facility on a full repayment basis.

CBILS will only be made available to businesses that were deemed “viable pre Covid 19” and as a consequence a “robust” case must be made for your new Capital Repayment Holiday or loan based on your pre Covid trading information.

It is important to note that if your financial and supporting information isn’t presented correctly to meet the lenders requirements, this could lead to a decline for support, which may impact on your existing loan covenants when considered against your lenders’ “prevailing” debt service criteria which may give your lender cause for concern post Covid 19.

During this period of uncertainty, we at Stewart Hindley & Partners are here to help you and have direct access to all the lenders’ that offer CBILS and who are accredited by the British Business Bank. https://www.british-business-bank.co.uk/. If for any reason your business is not eligible for CBILS then we can provide other routes to finance to support your business.

Given the record levels of demand that banks are incurring for general advice and CBILS applications, we at Stewart Hindley & Partners are able to offer, on your behalf, support through our own FCA relationships with all CBILS accredited lenders.

As a result, we are able to deal with the relevant Business Relationship Manager directly, to ensure a prompt application, with the best possible outcome given your circumstances and thereby take away the uncertainty by securing a decision in-principle within 24 hours.

If you’d like to discuss how we can assist you with your CBILS application or any other funding requirement during these challenging times, then please don’t hesitate to get in touch with us either via completing the contact form or by calling us directly on 01488 684834.

Five Key Factors To Consider When Converting A Home To A B&B

If you are thinking of running a bed and breakfast business from your UK home, this will almost certainly involve significant finance considerations.  Our specialist team of b&b finance advisors, here at Stewart Hindley, have identified 5 key factors which will come into play:

  1. Planning Permissions

Whether or not you will need building planning permissions will depend on the amount of building work required and will be subject to the local authority’s usual residential planning guidelines.

If you are converting more than one or two bedrooms, you may also be required to apply for ‘change of use’ and your local council should be able to provide advice.

  1. Building Regulations

The building regulations which apply to bed and breakfast establishments change quite regularly, particularly with regard to health and safety regulations, so it’s vital to refer to an up-to-date source of information.

Different regulations will apply depending on the size of your house and the number of guests you want to accommodate.  At minimum, you are likely to have to install things like fire doors, emergency lighting and fire safety signage, and the kitchen will probably need some work too.

Bed and breakfast businesses are also required to offer separate washing and toilet facilities for your family which won’t be used by guests and you may find that this involves quite a lot of unexpected work.

  1. Fitting Out Costs

Furniture and fittings will need to be of good quality to withstand constant use, and soft furnishings and beds etc will need to comply with current fire regulations.

To attract guests in a very competitive UK b&b market, allow enough in your budget to make communal areas like dining rooms and lounges, clean, bright and fresh.

  1. Advertising and Marketing costs

The hardest part of advertising and marketing is to come up with your image and style.  We would advice setting some money aside to commission a graphic designer to come up with a logo and brochure material to give a professional look to your website and promotional materials.

Spend time researching the local market and the search engines, like Trip Advisor, which are likely to be most effective at attracting the clientele you are seeking to attract.

  1. Do you have a b&b mortgage?

If you are thinking of running a b&b from home, you are legally required to advise your current mortgage provider of your intentions.  Most residential mortgages do not allow you trade rooms, so you would need to re-mortgage onto a commercial mortgage –  but don’t worry because our team at Stewart Hindley & Partners can advise you.

There are a limited number of lenders who will allow 1 or 2 rooms to be let on a residential mortgage, but it has to be done in agreement with the lender.  If a lender realises that you are trading on a residential mortgage they can call in the loan due to breach of covenant.

Trading on a residential mortgage can have serious consequences.  You could be forced to re-mortgage and in some cases, if your trade income is not enough to cover the amount of debt involved, this may not be possible. The worst case scenario may be that you lose your home as well as your business.

We strongly recommend that you don’t wait until it’s too late and look to take out a commercial b&b mortgage from the start.

Contact us now for friendly and professional advice based on many years of experience in the bed and breakfast and hospitality finance sector.

Sources:

http://www.startabedandbreakfast.co.uk/b-and-b-how-do-i-convert-house.html