Financial Management in Hospitality

The hospitality industry is fast-paced and over the last few years, it has faced many unprecedented financial challenges. In a world where the economic downturn has become the new normal, hospitality business owners, now more than ever, need to adopt the best practices and processes to effectively manage finances and make informed business decisions backed by financial data.

This guide will provide a comprehensive overview of key financial management aspects in the hospitality industry, including budgeting, auditing, financial tracking, and profit and loss reporting.

It will discuss the importance of each area and provide practical tips and strategies for effective financial management in the hospitality sector for hospitality professionals, managers, and owners who are involved in financial decision-making and want to improve their financial management practices.

4 best practices for hospitality financial management


Knowing how much money is coming in and out of your hospitality business is essential for success. For this reason, budgeting is a key skill and responsibility that all hospitality business owners should understand.

Budgeting is the process of calculating how much money your business has available to spend over a set period. This is often based on financial documents detailing the estimation of income and expenses over the period. Without an effective budgeting strategy, you may run out of money.

To create a business budget, you should utilise any existing data and identify patterns and trends. It is likely that seasons and calendar events have an impact on the performance of your hotel, pub, or restaurant and by analysing this information you can calculate budgets during high and low seasons.

Additionally, you can look for ways to cut costs and implement money-saving solutions to increase revenue and free up cash to be spent elsewhere in the business. This can be achieved by adapting, enhancing, and adjusting your products or services.

When budgeting, you should forecast for months or even years in advance. A budget oversees and plans for much more than just day-to-day operations and should protect you and your business during unforeseen circumstances and expected emergencies.


The term auditing refers to a financial statement audit. A financial statement audit is the process of analysing an important financial document from a company such as a cash flow statement, income statement, or balance sheet. This is usually completed by a financial statement auditor whose objectives are to ensure reasonable assurance that a company is free from material misstatements due to fraud or error.

Auditing is important to provide credibility to a firm and shareholders with confidence that accounts and business performance are true and reliable. Furthermore, auditing improves the credit rating of a business, boosts productivity in operations, and can attract additional stakeholders.

Through this process, auditors can help businesses in the hospitality industry monitor and utilise data including expenses, occupancy rates, and revenue, ensure the company is compliant with regulatory requirements, and identify areas of improvement to allow the business to grow.

Financial tracking

Financial tracking is the practice of analysing spending on a daily basis. This can be achieved by recording receipts, invoices, and business expenses. This process enables you to understand your spending, identify where you can cut costs, and monitor how much of your budget is being spent over time.

This information is typically recorded using accounting software to help hotels and hospitality businesses manage their budget effectively, track income and expenses, create financial reports, and analyse the overall financial performance.

A detailed financial tracking model will consider and include everything from payroll and property maintenance to energy and revenue. This is an effective way of capturing and tracking expenses to improve financial management in a business.

Profit and loss reporting

A hotel income statement, also known as a profit and loss statement, tracks a business’s revenue and expenses to calculate how much profit was earned over a particular period. A profit and loss report for a hotel, restaurant, or other hospitality business should include net sales, cost of goods sold, gross margin, operating expense, and net profit.

Each entry on a profit and loss statement will provide insight into how much money a company has made and spent over that period. This report is then used to assess the operational efficiency of a business and provide shareholders, creditors, and investors with an understanding of how a company manages its resources.

A profit and loss statement is an indicator of a company’s health and is one of the primary documents that will need to be provided when applying for loans or funding.

Financial Management in Hospitality FAQs

What is financial management in the hospitality industry?

Financial planning in the hospitality industry is the process of planning and organizing financial activities and operations of a business. This can be achieved by budgeting, auditing, financial tracking, and profit and loss reporting.

Why is financial management important to hospitality organizations?

Financial management is essential to hospitality organizations for success, growth, and expansion. By carefully monitoring their finances and expenditures, hospitality organisations can achieve their business goals and make informed decisions for the future.

What do you do in hospitality management?

Hospitality management involves overseeing all tasks of managing a hospitality business. This can include but is not limited to overseeing the day-to-day administrative, operational, and commercial activities of the business.

Stewart Hindley UK Hotel Finance and Hospitality Finance Specialists

At Stewart Hindley, we specialise in hotel finance to accelerate the success of your hospitality business. Financing a hotel is often a challenge but the good news is that we can help.

Whether you are new to trade or a first-time buyer with no track record, our specialists with over 20 years of industry experience have established relationships with lenders who will consider new-to-trade hotel operators.

With a proven track record in securing hotel finance for businesses in England, Scotland, Wales and Northern Ireland, we will find the right mortgage for you.

Our processes are clear, and we will help you every step of the way from advising what information you need to provide to liaising with lenders on your behalf.

For more information, get in touch with a member of the friendly team today.

8 Cost Saving Ideas for Hotels

Hotels, like any other business, have several reasons as to why it is important to save money and reduce overheads and outgoings.

Inflation, labour issues, and the rising cost of meeting the needs of modern, tech-savvy consumers are just some of the challenges hoteliers are facing. Saving money and cutting costs while maintaining an excellent customer experience is not easy and is one of the key issues in the hotel world.

If you own a hotel, bed and breakfast, or holiday rental, you may be searching for ways to reduce costs. This guide will mention eight cost-saving ideas that you need to consider to save money in your hotel business.

Why is it important to cut costs?

For hotels, it is important to cut costs to improve profitability, stability, and growth. By saving money, hotels can increase their profits and reinvest those funds elsewhere in the business. This allows hoteliers to improve their cash flow management and create accurate cash flow forecasts for the future.

Cutting costs is often faster and easier than growing revenue and can provide hotels with quicker results.

How can your hotel save costs?

There are a number of different ways hotels can save money and cut costs. Here are some ways your hotel can reduce expenses:

1. Build customer loyalty

Customer loyalty can save hotels money in many different ways. For example, loyal customers are likely to return and repeat business providing you with continual income streams. Additionally, loyal customers are likely to return to your hotel without the need for targeted marketing campaigns.

In this instance, it pays to provide customers with an excellent stay and experience to benefit from future customer acquisition costs, maintain steady occupancy rates, and of course, improve your competitive advantage.

2. Encourage word-of-mouth

Furthermore, loyal and satisfied customers are likely to recommend your hotel and services through positive word-of-mouth reviews. This means your hotel can attract new customers at no additional cost.

3. Optimise working rotas

Optimising working rotas and employee schedules can cut costs by avoiding overstaffing, minimising overtime pay, and ensuring compliance with employment laws. By accurately forecasting seasonal demand, hotels can make informed staffing decisions and save money by avoiding underestimated and overestimating staffing needs.

Additionally, consistent and fair work rotas have the power to engage and motivate employees and reduce employee burnout. Happy employees are much more likely to provide a great service to guests reducing the risk of complaints and negative reviews.

4. Staff retention

Ensuring that staff are not overworked and avoid excessive working hours can help to prevent burnout and reduce employee turnover. In turn, this reduces costs by saving on recruitment, hiring, and training. Onboarding new employees is a costly process. Making sure your current workforce is happy and satisfied helps to retain your team and cut costs.

5. Adopt a good marketing strategy

A good marketing strategy will focus on targeting your target audience. Marketing efficiency avoids overspending on marketing campaigns that are not aimed toward your audience. Using an efficient marketing strategy, your hotel can produce maximum return for minimal cost. This allows you to reduce costs while maintaining optimum results.

6. Limit marketing costs

While marketing is important to attract new customers and improve brand awareness, limiting your marketing costs can save you money. However, reducing your marketing costs does not mean that you stop creating engaging content that resonates with the audience.

In fact, organic and authentic content that you or your employees can produce using a mobile phone and free editing software is proving immensely popular on social media platforms such as TikTok. Thanks to the advancement of social media, marketing no longer requires high costs to get a great return.

7. Utilise your hotel floor space

By utilising your hotel floor space, you can maximise revenue, lower operational costs, and improve the overall guest experience. Efficiently using your floor space allows your hotel to accommodate more guests improving your revenue potential. Similarly, efficient floor space reduces energy, lighting, and electricity consumption further cutting costs to save money.

8. Adopt green practices

Green and eco-friendly practices, such as reducing energy and water consumption, using renewable energy, recycling waste, and sourcing locally, not only help to cut costs but also appeal to environmentally conscious guests.

Sustainable practices are becoming a top priority for hotels as they help to reduce environmental impact while maintaining a comfortable experience for guests.

Frequently asked questions

How can hotels reduce expenses?

Hotels can reduce expenses by building customer loyalty, optimising employee schedules, implementing staff retention schemes, adopting a good marketing strategy, utilising the hotel floor plan, and adopting green practices.

How can I make my hotel more profitable?

You can make your hotel more profitable by analysing and reducing operational costs. This can be achieved by implementing energy-saving appliances to reduce utility bills, negotiating better pricing with suppliers, optimising staff rotas to avoid overstaffing, and delivering great customer experiences to build customer loyalty to secure repeat business.

How do you cut costs in housekeeping?

You can cut costs in housekeeping by encouraging guests to reuse towels to save on water consumption and labour. Additional ways you can cut costs in housekeeping include purchasing cleaning supplies in bulk, effectively scheduling room cleaning, and offering a minimum night stay to reduce cleaning between guests.

What is cost control in hospitality?

Cost control in hospitality is defined as the method of reducing business expenses by managing and analysing financial data. This is the process of reducing business expenses to increase profits and revenue and improve the profitability of a hotel business.

Stewart Hindley UK Hotel Finance and Hospitality Finance Specialists

At Stewart Hindley, we specialise in hotel finance to accelerate the success of your hospitality business. Financing a hotel is often a challenge but the good news is that we can help.

Whether you are new to trade or a first-time buyer with no track record, our specialists with over 20 years of industry experience have established relationships with lenders who will consider new-to-trade hotel operators.

With a proven track record in securing hotel finance for businesses in England, Scotland, Wales and Northern Ireland, we will find the right mortgage for you.

Our processes are clear, and we will help you every step of the way from advising what information you need to provide to liaising with lenders on your behalf.

For more information, get in touch with a member of the friendly team today.

Types of Hotel Ownership

Hotel ownership comes in different forms, each with its unique advantages and disadvantages. Understanding the different types of hotel ownership can help prospective hoteliers make informed decisions about their investments.

In this article, we will delve into the four primary categories of hotel ownership: franchised, privately owned and operated, leased, and managed, exploring the characteristics of each ownership type, along with their respective advantages and disadvantages. Read on to discover which hotel ownership model aligns best with your plans and aspirations.

Franchised Hotels

Franchised hotels operate under an established brand, with the owner holding a franchise agreement. This agreement allows the hotelier to use the brand’s name, trademarks, and systems in exchange for royalty fees.


Franchised hotels benefit from immediate brand recognition, leveraging the established reputation and marketing efforts of the parent company; this helps attract customers more easily than starting from scratch. Franchisees also receive ongoing support, including training programmes, operational guidance, and marketing assistance from the franchisor.

Being part of a franchise allows hoteliers to enjoy the advantages of collective purchasing power and economies of scale, and franchisees often benefit from a central reservations system, enabling access to a broader customer base.


While there are many advantages to franchising, there are also some less favourable considerations, such as the high initial investment – franchise agreements typically involve significant upfront fees and ongoing royalty payments.

There is also less flexibility and autonomy as franchisees must adhere to brand standards and guidelines, meaning they may have less freedom to introduce unique concepts or adapt quickly to market changes.

Privately Owned and Operated Hotels

Privately owned and operated hotels are independent establishments owned by individuals or private entities. These hotels have complete control over their operations, branding, and marketing strategies.


Owners have the freedom to create a unique identity and tailor the hotel experience according to their vision; this also means they can swiftly respond to market demands, implement changes, and differentiate themselves from competitors. This often results in privately owned hotels creating a more personal and intimate guest experience.

Because there are no franchisors or management companies to share revenues with, owners retain all the profits earned through their hotel.


Independent hotels may lack the resources and support available to franchised or managed establishments, meaning owners are responsible for all aspects of hotel management, including marketing, reservations, and operational systems. As a result, building brand recognition can be challenging, requiring significant marketing efforts and investments.

Leased Hotels

Leased hotels involve an agreement where the owner leases the property to an individual or entity, who then operates the hotel and assumes responsibility for its day-to-day management.


Owners receive regular rental income without the operational and financial risks associated with hotel management, as the lessee bears the brunt of market fluctuations and economic uncertainties. Leaseholders handle the hotel’s operations, staffing, and maintenance, allowing owners to focus on other investments.


Because of the lease setup, the owner has minimal control over the hotel’s operations, marketing strategies, or guest experience. This means that success hinges on the competency and commitment of the lessee, which may pose risks if they lack experience or encounter financial difficulties and, if the hotel performs particularly well, the owner may miss out on potential profits.

Managed Hotels

Managed hotels involve a contract where a professional hotel management company is hired to operate the property on behalf of the owner. The management company takes charge of day-to-day operations and implements its expertise to maximise profitability and guest satisfaction.


Hotel management companies bring extensive industry knowledge, experience, and best practices to optimise operations and revenue generation. The management company shares the financial risk and responsibilities with the owner, aligning their interests to achieve profitability.

They also often have established networks and relationships with suppliers, travel agencies, and online booking platforms, expanding the hotel’s reach. Furthermore, managed hotels benefit from a pool of trained professionals recruited and supervised by the management company.


Owners relinquish operational decision-making authority to the management company, which may result in a loss of control over certain aspects of the hotel’s operation, particularly if the owners are locked into a long-term management agreement.

Hiring a management company involves additional costs, including management fees, performance incentives, and potential profit-sharing arrangements.

How can Stewart Hindley help?

Choosing the right hotel ownership model requires careful consideration of individual goals, resources, and preferences. There are advantages and disadvantages to each of the approaches explored above and understanding them can help aspiring hoteliers make an informed decision to achieve success in the dynamic and exciting hospitality industry.

Remember, the choice of hotel ownership should align with your long-term vision and business objectives. Whether you opt for a franchise, private ownership, lease, or management, the key to success lies in strategic planning, effective execution, and a commitment to delivering exceptional guest experiences.

If you are looking to move into hotel operations, we can help. We are specialists in hotel finance and have been helping people get into hospitality for over 15 years. Get in touch with us today.

16 Ways You Can Boost Your Hotel’s Midweek Occupancy

While weekends may naturally attract more leisure travellers, tapping into the midweek market can significantly increase your revenue and overall profitability. In this article, we’ll explore actionable tips that hoteliers can implement to boost midweek occupancy rates effectively.

What are occupancy rates?

Occupancy rates are a critical metric that every hotelier should keep a keen eye on. It measures the percentage of rooms in a hotel that are occupied during a specific period, typically calculated on a daily, weekly, or monthly basis. Understanding and optimising occupancy rates are essential for any hotel’s success, and one key area that often requires special attention is midweek occupancy rates.

Occupancy rates represent the heart of a hotel’s performance evaluation. They offer a clear picture of how well a hotel is utilising its available room inventory. The formula to calculate occupancy rate is straightforward:

Occupancy Rate = (Number of Rooms Occupied / Total Number of Rooms) * 100

For instance, if a hotel has 200 rooms and 160 are occupied on a particular night, the occupancy rate for that night would be 80%.

Why do high occupancy rates matter?

High occupancy rates mean that a hotel is selling more rooms, which directly impacts its revenue potential. Increasing occupancy rates, especially during traditionally slower periods like midweek, can significantly boost overall revenue and profitability. Occupied rooms also mean more guests using on-site amenities such as restaurants, bars, spa services, and room service. Increased ancillary revenue from these services further bolsters the hotel’s overall financial health.

Hotels with consistently high occupancy rates are often perceived as more successful and desirable by potential guests. Positive word-of-mouth and online reviews from satisfied guests can attract even more visitors, leading to a positive feedback loop for future bookings.

High occupancy rates allow hoteliers to gather more data about their guests, enabling them to better understand their preferences, behaviour, and booking patterns. This information can be used to tailor marketing strategies and offerings, thus attracting more guests during the midweek.


Why Midweek Occupancy Rates Deserve Special Focus

The focus on midweek occupancy rates is crucial due to the characteristic fluctuations in demand that occur during the week. Tapping into the midweek market presents a tremendous opportunity for hoteliers to optimise their occupancy and revenue streams.

In the following sections, we will delve into actionable tips that hoteliers can implement to boost midweek occupancy rates effectively, ensuring a thriving and successful hotel business throughout the week.

Ways to improve your midweek occupancy rates

There are many ways you can boost your midweek occupancy rates, from tailored marketing to enticing packages and working closely with local businesses.

Targeted marketing

Target midweek travellers in your marketing

Target the corporate traveller segment by offering amenities and services tailored to their needs. Fast and reliable Wi-Fi, business centres with printing facilities, meeting rooms, and shuttle services to nearby business districts can make your hotel an appealing choice for professionals travelling during the week.

This isn’t just limited to business travellers though, think about how you could attract retirees looking for good deals. This could include early bird specials in your restaurant, partnering with coach trip companies and highlighting the attractions near your hotel that would interest an older audience.

As well as business travellers and retirees, you might also consider attendees of nearby trade shows, conferences, theatre shows and festivals. Placing adverts with the exhibition centres and theatres, or running certain deals with these providers, can boost your midweek occupancy.

Engaging in social media campaigns

Create captivating social media campaigns specifically targeting midweek travellers. Use stunning visuals, and user-generated content, and share testimonials from satisfied midweek guests to build excitement and encourage bookings.

You could also run a competition with a midweek break as a prize – while the winners won’t pay for their stay, you’ll gain exposure and increase the likelihood of other people booking midweek breaks.

Personalised email marketing

Leverage your customer database to send personalised email campaigns to your guests. Segment your email list based on past stay history or preferences and offer enticing midweek deals tailored to each segment. Encouraging repeat visits from previous midweek guests can be a lot more successful and efficient than attracting new visitors.

Loyalty and referral programmes

Implement a loyalty programme that rewards guests for midweek stays. Offer exclusive perks, such as room upgrades, welcome amenities, or bonus loyalty points, to encourage repeat midweek bookings. Additionally, incentivise guests to refer friends and family for midweek stays through referral programmes.

Packages and policies

Tailored midweek packages

Create exclusive midweek packages that cater to the needs and preferences of potential guests. While you can run a discount on midweek rooms, you could also try introducing specials and packages that include something extra for the same price, such as complimentary breakfast, spa treatments or local activity vouchers.

Flexible check-in/check-out policies

Flexibility in check-in and check-out times can be a game-changer for midweek travellers. Offer the option for early check-ins and late check-outs whenever possible, as it allows guests to maximise their stay, especially those with tight schedules or early morning/late-night flights.

Maximise your weekend visitors

Encourage your weekend guests to stay an extra night on either side of their trip when they book, for example offering a 10-20% discount for arriving on Thursday night instead of Friday night, or staying until Monday instead of Sunday so they can fully relax and enjoy the area or your hotel’s amenities.

Working with industry

Participate in industry events

Attend relevant industry events and trade shows to network with potential clients and corporate travel managers. Establishing strong connections within the business travel community can lead to increased midweek bookings through corporate partnerships.

Collaborate with local businesses

Forge partnerships with nearby businesses, such as event venues, conference centres, or local offices. Offer special rates and exclusive deals to attendees or employees, making your hotel the preferred choice for midweek stays.

You can also make contact with estate agents; people looking to move into the area may not have anywhere to stay and would like to spend some time exploring their potential new town.

Rent out your space

Invite businesses to use your conference rooms for networking events, product launches or other corporate gatherings; these events are often held during midweek evenings and attendees may prefer to spend the night at your hotel instead of driving home.

Off-peak events

Unique midweek events

Organise midweek events or workshops that align with your hotel’s theme and target audience. These could include cooking classes, wine tastings, art exhibitions, or wellness workshops. Such events can attract attendees who may choose to stay at your hotel for added convenience.

Highlight off-peak perks

Promote the advantages of midweek stays to your target audience. Emphasise the tranquillity and reduced crowds at nearby attractions, making it an ideal time to explore the area without the typical weekend rush.

How can Stewart Hindley help?

As specialists in hotel finance, we have been helping people get into the hospitality industry for over 15 years and can start you on your way to opening your own hotel. Get in touch with us today.

Bed and breakfast and hotel mortgages when base rate is high

Is it worth getting a commercial mortgage at a high Bank of England base rate?

If you’ve been considering buying a quality bed and breakfast or a hotel, believe it or not, now is not the time to flinch at the Bank of England Base Rate (BoE BR) increases, in fact this should be seen as a rare and unique opportunity to purchase your dream lifestyle hospitality business.

5% used to be a normal and competitive interest rate for hospitality

Although BoE BRs are at a recent all-time high, they are still relatively low in comparison to the pre-financial crash back in 2008, when the BoE BR was 6%, at the time this rate was the norm and reasonably competitive.

The current prevailing rate of 5% can in this context still be seen as reasonably competitive and importantly this didn’t prohibit people buying businesses back in the day.

Interest rates are more realistic in 2023

It is only since the financial crash of 2008 that we’ve seen BoE BRs plummet to near zero and which in-turn led to an unprecedent rise in business values, because cheap money was readily available, supported by the Bank of England’s policy of quantitative easing and latterly the financial support offered by the UK Government to businesses during and post pandemic.

Despite the ups and downs of Base Rates, Lenders who are considering lending to people requiring commercial mortgages have always factored in potential rises in BoE BRs to ensure that their loan servicing was secure, even if BoE BRs increased to 12% which is a doomsday scenario.

On a positive, the increase in Base Rate to 5% has led to more realistic pricing of hospitality and leisure businesses, as there is a real perception out there that these increases will make borrowing money more expensive, which it indeed will.

Cost of borrowing offset by reduction in market pricing

Conversely, the increased cost of borrowing will be off-set by a reduction in market pricing, especially so in the hospitality and leisure sectors that are prone to discretionary expenditure, so on balance, you’ll not be overly disadvantaged by higher BoE BRs, when buying a hospitality or leisure business.

You might ask why this is the case, the answer is simpler than you might think: vendors generally sell their hospitality and leisure business for a variety of reasons, retirement being the most common, followed by death, divorce and debt.

As a consequence, business owners who want a rapid exit with an expeditious sale are very concerned that the increases in BoE BRs have caused market uncertainty, with commercial mortgage debt being considered as unaffordable by many prospective purchasers, when in fact debt is still comparatively cheap.

Hotel and Bed and Breakfast purchase prices discounted by up to 20%

To counter these concerns, vendors are turning to discounting the guiding price of their businesses for an expeditious sale, sometimes by up to 20% or more, which wouldn’t have even been considered by the vendor or by their sales agent some 18 months ago.

So how can you take advantage of this unique and limited opportunity before the market corrects itself and prices of hospitality and leisure businesses return to pre-BoE BR increase norms.

Specialist commercial mortgage brokers can help

Quite simply, you need to engage with a firm of specialist hospitality and leisure brokers, such as Stewart Hindley, who have the sector expertise and knowledge to provide a funding solution that ticks the lenders’ boxes and one that is affordable at the current BoE BR.

Stewart Hindley can provide funding solutions over longer terms, ensuring that your loan repayment are affordable at the current BoE BR, with options like interest only payments and capital repayment holidays, to off-set the current high cost of borrowing until Base Rates reduce, as well as seasonal payments to improve cash flow and debt servicing.

The future of base rate hikes in 2023

Looking to the future, BoE BR are predicted to reduce to circa 2.5% by the 2nd Qtr. of 2024, so the hike in Base Rates will be short lived and will result in businesses returning to more robust market pricing in the 2nd Qtr. so, there is a limited window of opportunity to realise your dream of owning your own life style Bed & Breakfast or Hotel.

In summary, Stewart Hindley can not only secure the most competitive commercial mortgage debt for you, but also manages all aspects of the debt raising, ensuring that you are not over paying for your business purchase and that your debt is affordable even if Base Rates increase in the future

To hear more about how Stewart Hindley can help you with a commercial mortgage to buy your life style business, get in touch

Can I get a mortgage for a B&B, Guest House or Hotel when B of E base rates are high?

The answer is yes! Whilst the recent rise in Bank of England base rates can be described as unprecedented, in reality, borrowing money is still cheap in comparison to what it cost 7 or 8 years ago when base rates were at a similar level.

The determining factor is not whether you can afford higher base rate, but whether or not the business can afford to pay the higher base rates, when the lenders’ interest margin is added, this is commonly known as the lenders’ pay rate which is invariably based on the lenders Standard Variable Rate (SVR) which tracks the prevailing Bank of England base rate.

With Bank of England base rates expected to peak by the end of May to 4.5%, they are then expected to decline to circa 2.5% / 3% by the Autumn making for more affordable lending position.

When buying a B&B, Guest House or Hotel you need to consider the businesses Trading Profit, not the Net Profit, as the Trading Profit is before Loan Interest, Depreciation and other Exceptional or Extra Ordinary Expenditure.

Lenders will consider the Trading Profit as the means to service their commercial mortgage, on a full repayment basis over the term of the loan, when considered against the Bank of England prevailing base rate and their margin and when stress tested to allow for future rises in base rates.

So, the question is, do you buy a B&B, Guest House or Hotel when base rates are at a recent all time high, or do you wait until they reduce and possibly lose out on your dream of a life stye business.

The answer is, that when lending is considered expensive, due to base rate increases, this leads to a stagnation in market sales activity due to perceived affordability issues.

Sales Agents and Vendors then become concerned if their pricing is reflective of the market and transactional lead times.

This provides a unique and time limited opportunity to acquire a B&B, Guest House or Hotel with a realistic price reduction ,given the uncertainty in the market and the desire of the vendors’ to move on, given that increases in base rates also have an impact on the cost of living, which also increases  residential mortgage payments which is a good example, as individuals and household money available for discretionary expenditure, such weekends away, or holiday stays, becomes constrained or is perceived to be so, which is a mind set and doesn’t always reflect reality.

For your peace of mind, no reputable broker would recommend a mortgage that wasn’t affordable when considered on prevailing base rates, moreover lenders only consider after stress testing, to ensure that their loan is serviceable even if base rates went to 10% which is as much about protecting their best interests as it is much as yours.

If you’d like to discuss whether or not a commercial loan is affordable to purchase a B&B, Guest House or Hotel, get in touch with one of our expert brokers for a impartial and no obligation chat.

What is the difference between staying at bed and breakfasts and guest houses?

One of the biggest questions that prospective purchasers ask is what is the difference between a B&B, a Guest House and a Hotel. Chris McDonagh, Senior Partner at Stewart Hindley, explains the differences.

Firstly, there is no legal dividing line between these businesses and no generally accepted rule either.

VisitEngland calls both B&Bs and Guest Houses ‘guest accommodation’, and AA Hospitality have decided that an establishment with ‘Hotel’ in its name should be treated as a Hotel. So, to say the least, the distinction between these terms is a grey area.

Star Rating Schemes

There is, however, a sharp distinction in the star rating schemes between ‘guest accommodation’ and ‘hotel’, with star ratings for each being decided on very different criteria. Don’t expect a 4-star B&B to have the same facilities as a 4-star hotel. It was possibly clearer when the former used to be awarded diamonds, and the latter stars.

The Size of the Establishment

As a broad rule of thumb, though, B&Bs tend to be smaller – most being under 10 rooms or so, and Guest Houses larger (often roughly 10-25 rooms). None of those dividing lines are exact though – and you will find 15-room B&Bs and eight-room Guest Houses (and indeed ‘hotels’).

How any individual establishment is named is in most cases historic, rather than the result of a measured decision.

Boutique Establishments

Meanwhile, the term ‘Boutique Hotel’ or ‘Boutique B&B’ is relatively new and has no official definition. It is used by owners who want to emphasise that their property is stylish and high quality, even if small. It tends to indicate design-led establishments, but it is a highly subjective judgement.

Serviced Apartments

There is a recent trend to converted traditional B&Bs and Guest Houses to serviced apartments, that generally offer larger rooms, sometime studios with small kitchenettes, to provide for longer stays. There is minimal host intervention with bookings taken on-line with automated access via a smart phone or electronic key pad.

These stays are graded on convenience rather than on guest host interaction which works for some but not for all dependent on the type of stay. Business travellers generally prefer minimal interaction whereas vacationers like the personal meet and greet service.

What makes B&Bs and Guest Houses Special?

The common factor for B&Bs – is that they are owner-managed, and not part of a chain. That means that they can offer the sort of individual welcome and service, local knowledge and home-cooked breakfast that larger, purely commercial businesses can’t replicate.

Consumers love these added extras, with millions of guests rating B&Bs and Guest Houses higher for guest satisfaction than hotels.


How to Manage Commercial Loan Repayments

In these uncertain economic times, compounded by the increase of Bank of England base rates, which have resulted in an increase of the  cost of borrowing and loan repayments, there is a unprecedented pressure on all businesses to make ends meet, especially so when it comes to managing their loan repayments. The question is, how can I manage my businesses loan repayments when there simply isn’t any spare capacity in my cash flow to do so?

Many business owners have experienced sleepless nights worrying about repaying their loan, this problem which if not managed, can result in business failure.  So how can you avoid this potentially disastrous situation? Surprisingly the solution is relatively straight forward. There are a number of options available to business owners like you.

Communication with the lender is key

The first and most important thing is to communicate with your lender. Advise them as soon as possible that you have a problem, ideally well before the debt debit for your loan is returned as unpaid as this is often followed by a call from your lender, which puts you on the back foot as it indicates that you are not in control of your business finances and making for spur of the moment implausible excuses. This could lead to the transfer of your loan account to your lenders business support team, this isn’t a place where you need to be and worst case this transfer can lead to recoveries action.

How you do maintain lender confidence in your business?

It is important to understand that the lender is there to help you wherever possible, they have a mandate under their terms of business to do so. Explain succinctly how the problem has arisen, which could be the after effects of the pandemic or some equally significant situation such as an unexpected loss of revenue, or perhaps a personal family matter.  The lender will want to understand how long the problem is likely to last for and what you are going to do about it, all of which can represent challenges for you and the lender.

Short term cash flow resolutions for a commercial loan

One instance may be a short-term cash flow situation which can be resolved by micro managing your cash flow to meet loan repayments. If there isn’t the scope within your business to do so, then there are various other ways that can improve the situation. For example you could request a loan repayment holiday for 3 months to provide you with some breathing space to remedy matters, alternately, request that for a period of time, say 12 months, that your loan reverts to interest only payments or just capital repayments and finally ask for an extension of the loan term to make your loan repayments more affordable and in line with your businesses cash flow.

These steps will help your business survive but will also improve you relationship with your lender as they always appreciate transparency.

If you feel somewhat daunted and possibly embarrassed dealing with your lender, a specialist finance intermediary, such as Stewart Hindley & Partners can act for you to secure the best possible outcome. Get in touch with us today.

Interest Rates and Hospitality Loans

I think it’s fair to say that there is never a right or wrong time to buy a B&B, Guest House or Hotel, and in these uncertain and challenging times perhaps now is definitely not the right time to buy.

However, despite economic sentiment there’s really never been a better time to buy these lucrative businesses as market sentiment is softening due to the staycation market returning to pre pandemic norms and vendors being more realistic about pricing.

What are the effect of high interest rates?

“What about high interest rates?” I hear you say, “Are lenders still willing to lend despite the high interest rates?” which are actually driven by Bank of England base rate and not the lenders themselves.

Whilst the Bank of England base rate has increased from an unprecedented 0% to 4.5%, this is recognised as a short-term expedient to reduce inflation. Most financial pundits are forecasting base rates at 2% by the autumn making funding more affordable and very near recent historic lows. It wasn’t that long ago in 2007 (pre the financial crisis), base rates were 5.5%, so in the scheme of things a 4.5% base rate isn’t unprecedented.

Unfortunately current market sentiment more often than not is driven by the MSM (mainstream media) and has resulted in a cautious approach for lenders, sellers and purchasers alike. Lenders are concerned that commercial debt must be serviceable in real terms also when stress tested and sensitised to allow for future increases in base rates, the latest hike being a case in point.

Sellers are concerned that higher base rates will mean that purchasers will stand back from buying their businesses until base rates returns to recent norms of 0% which they won’t. Purchasers will just take the view that borrowing is unaffordable and as a consequence lenders won’t consider funding, so will also sit on their hands until base rates reduce to recent norms. All of this causes transaction stagnation in the market be it hospitality or other sectors.

How is the trading profit factored into a loan?

In the real world, the cost of borrowing is simply factored into the borrowing and transaction process. Lenders have always considered on this basis and the $64,000 question… Is the loan affordable when considered in relation to the trading profit outcome?  As businesses are invariably priced on their trading profit attainment, the answer is a resounding yes!

The challenge is how the trading profit is assessed and calculated for the purposes of borrowing and this is where an experienced hospitality and leisure broker such as Stewart Hindley & Partners can make a significant difference in achieving a successful and timely outcome.

If you want to buy a B&B, Guest House or Hotel, don’t be put off by high base rates.

Whilst the market for these businesses continues to represent excellent value, once base rates reduce and lending becomes more affordable again, the sellers resolve to secure their market price will strengthen, which means less opportunity to secure a price reduction.

As it takes some 3 to 4 months from enquiry to drawn down, the lenders interest rate pricing will reflect the anticipated reduction in base rates by the autumn, making for a commercial affordable lending proposition.

Get it touch with us today for an expert opinion.

The Use of Technology in the Hospitality Industry

Technology has been a game-changer in the hospitality industry. From booking accommodations to making payments, technology has transformed the way we experience hospitality. In this article, we will explore some of the new technologies that are helping the hospitality industry and what the future holds for technology in this sector.

New Technology in Hospitality

Contactless technologies are more popular than ever, whether that is paying via contactless means at a restaurant (either by using a contactless card or paying for their meal from their table through an app or browser), or contactless check-in and check-out at a hotel or B&B, i.e. checking in/out of their accommodation without interacting with staff members. This technology has become increasingly popular during the COVID-19 pandemic as it allows guests to maintain social distancing and reduces the risk of transmitting the virus. Contactless services are made possible by technology such as facial recognition, mobile apps and kiosks. As well as being more hygienic and often a quicker experience for customers, these contactless tactics allow staff to focus on other tasks, saving time and money.

Another technology that is helping the hospitality industry is chatbots. Chatbots are AI-powered bots that can assist guests in booking reservations, answering frequently asked questions and even ordering room service. Chatbots can be integrated into the websites and mobile apps of hotels, restaurants and tourist attractions, making them easily accessible to guests and customers. This technology not only improves guest experiences but also helps businesses save time and money by reducing the need for staff to answer repetitive questions.

Technologies such as virtual reality and augmented reality are also becoming more prevalent in the hospitality industry. Virtual reality allows guests to experience a hotel or resort before they even arrive, giving them a better understanding of the property and what it has to offer. Augmented reality can also be used to enhance guest experiences, such as by providing interactive maps or virtual tours.

The Future of Technology in Hospitality

As technology continues to evolve, we can expect to see even more advancements in this sector. One trend that is likely to continue is the use of AI and machine learning. These technologies can help hotels, resorts, B&Bs and other businesses personalise guest experiences, anticipate guest needs and even predict future demand.

Another technology that is likely to become more prevalent is the Internet of Things (IoT). IoT technology can be used to create smart rooms that can adjust lighting, temperature and other factors based on guest preferences. This technology can also be used to track guest preferences and behaviours, allowing hotels to tailor their services to each individual guest. IoT isn’t just customer-facing either; all sorts of hospitality businesses can use integrated technologies to, for example, automate stock counts and to make heating and lighting more efficient throughout their sites.

Finally, we can expect to see even more contactless technologies in the hospitality industry. As guests become more accustomed to contactless experiences, hospitality providers will need to continue to adapt to meet these expectations. We can expect to see more mobile apps, kiosks and other technologies that allow guests to interact without physical contact.

Businesses that are able to adapt to these technologies will be better equipped to provide exceptional guest experiences and stay ahead of the competition.

How can Stewart Hindley help?

If you’re thinking about getting into the hospitality industry, or want to expand your current business, get in touch with a member of our skilled and experienced team who will help you achieve your goal.