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 who 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?

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.

When Do You Need an Alcohol Licence?

In the UK, any business that plans to sell or supply alcohol must operate in accordance with the relevant licencing laws.

But what does this mean for your hospitality or accommodation business?

Can you sell alcohol without a licence?

The Licencing Act 2003 is the legislation used to licence premises in England and Wales on their sale of alcohol. This Act outlines the laws that any business selling alcohol must follow, including the licences they need to apply for and the processes they must put in place to ensure that the sale of alcohol is carried out responsibly.

Under the Licensing Act 2003, you must have both a Personal Licence and a Premises Licence to sell or supply alcohol on your premises.

What about providing free alcohol to my guests?

Many holiday lets, B&Bs and hotels provide guests with a welcome hamper filled with local delicacies, including a bottle of wine. This is a great way to impress your guests and make a good first impression.

However, if you provide free alcohol for your guests, you should be aware that you will still require an alcohol licence. This is because your guests have paid to stay in your accommodation, which means they are essentially paying for the ‘free’ alcohol.

The government is currently in the process of introducing Community and Ancillary Sales Notices (CANs) that will allow accommodation businesses to sell small amounts of alcohol for a nominal fee.

How do I apply for an alcohol licence?

To apply for an alcohol licence, you’ll need to complete an application form and send it to your local council, along with the fee. Some councils accept electronic applications – if this is the case, you’ll be able to apply online.

Once you have obtained a Premises Licence, you will need to become a Personal Licence holder. This will allow you to provide alcohol on behalf of your holiday home. You can apply for this licence through the Government website.

What is the cost of an alcohol licence?

There are two sets of fees involved in applying for an alcohol licence, both of which are based on rating bands. You’ll initially need to pay a fee to cover the cost of applying or varying a licence. In addition to this, you will have to pay an annual charge once the licence has been granted.

At Stewart Hindley, we can help you with all aspects of purchasing or re-mortgaging a hospitality business, including advice for licencing and legalities. For more information, please get in touch with our expert team.

How to Start a B&B or Guest House

Whether it’s always been a lifelong dream of yours to open a bed and breakfast (B&B) or you’ve identified a great business opportunity, running a B&B can be incredibly rewarding and lucrative.

At the same time, the purchasing process can seem overwhelming. There are a number of factors to consider before opening your B&B doors to the public.

If you’re hoping to open a bed and breakfast and you don’t know where to start, you’ve landed in the right place. Here’s our guide to opening your very own B&B.

Is it right for you?

First and foremost, you must consider whether or not owning a bed and breakfast is right for you. This is something that takes a lot of hard work and commitment, so starting a B&B should not be a decision that you take lightly – your new business will require your time and attention day in, day out.

Consider the costs involved

Once you’ve committed to the idea of opening your B&B, it’s time to consider the costs involved. Whether you’re buying a B&B, transforming your own home into a B&B or purchasing an existing bed and breakfast business, the same running costs will apply.

From merchant services costs, food, personal expenses and linen costs, through to furnishings, business supplies, smoke detectors and fire alarms, there’s an awful lot to consider. Make sure you’re aware of all the costs involved and have calculated how much you will need to charge to cover these expenses and make a profit – is it achievable?

Familiarise yourself with the rules and regulations

Before opening a bed and breakfast, you’ll need to familiarise yourself with the rules and regulations associated with running a B&B business.

And, although you don’t need a qualification or licence to open a B&B, you will need to take into account fire regulations, consult with your local authority planning office before putting any concrete plans in place, gain planning permission for any alterations, obtain necessary alcohol and TV licences and make sure you register with the HMRC for tax purposes.

Know your market

Before you consider opening a B&B, it’s important that you understand the needs and expectations of your target market.

Depending on the location of your bed and breakfast, you’ll either be catering for business or leisure guests, or a combination of the two, and it’s important that there is a demand for your services in the area.

With this in mind, don’t fall into the trap of falling in love with a property, only for it to fail in the first few months due to there not being any customer demand.

How much money do you need to start a B&B or Guest House?

The amount of money you’ll need to start your new business venture will depend on a number of factors, including how much work needs done to the property, whether you already have an existing client base or not, and the level of service you are intending to offer.

All of these should be analysed in your business plan and marketing strategy before you even consider purchasing or converting a property.

Tourism is big business throughout the UK. But, if you’re thinking about starting a bed and breakfast, it’s crucial that you do your research to determine whether it’s the right decision for you.

If you’ve done your research and you’re ready to set up your own B&B, get in touch today to find out how we can help with your mortgage for a bed and breakfast business.

What to Look for When Purchasing a B&B or Guest House

Many people dream of owning their very own bed and breakfast (B&B). Running a successful B&B business can be exciting, rewarding and profitable, but there are a number of other factors you should consider before taking the plunge.

With the average B&B business in the UK generating £70,000 a year, the B&B industry is thriving, making it a great business opportunity for those looking to earn a living doing something they love. But what should you consider when purchasing a B&B?

Do your research

First and foremost, before purchasing any property or business, you should always carry out extensive research into the property and the area surrounding your chosen B&B business.

Some of the questions you should be asking include when was the B&B established, its yearly turnover (if this is not disclosed, ask why!) and whether the business is currently active or not.

What’s included in the sale?

Before you sign on the dotted line, make sure that you find out what’s included in the sale price. For example, fixtures & fittings are usually included in the purchase price check that this is the case, how many employees does the business have, and is there any living accommodation?

The last thing you want is to be out of pocket before you even get the keys to your B&B.

Why is it being sold?

A lot of people are afraid to ask the question “why are you selling up?”

But this is one of the most important questions you should ask when looking to buy a B&B. After all, you don’t want to be investing in a B&B business that’s struggling.

Of course, many B&B owners sell for perfectly plausible reasons, such as for family or due to a change in circumstances. But it’s important to ask.

Where do you stand legally?

You should understand all of your legal obligations before investing in a B&B, including any food hygiene legislation you will need to adhere to, health and safety regulations, and any fire precautions that will need to be in place.

You should also be aware of your insurance and liability obligations, terms and conditions when it comes to bookings, property damage and cancellations, as well as small claims.

You may wish to attend a Bed & Breakfast course which will cover all aspects of owning and operating a bed and breakfast business.

How much deposit do I need to buy a bed and breakfast?

A deposit is required for commercial properties. With this in mind, if you’re looking at a minimum deposit for mortgage, you can expect to put down around 30– 40 percent of the asking price – this is standard for all commercial properties.

If you’re considering purchasing a B&B, we can help. Our expert team is perfectly placed to help you obtain the best financial solutions on the market, so get in touch today.

How Much Deposit Do I Need to Buy a Bed and Breakfast?

Opening a bed and breakfast (B&B) can be a great way to generate income while stepping back from the typical 9 to 5. It’s hard but rewarding work, and enables you to create a business that reflects your personality and passion as a hospitality business operator.

However, unless you live in a large property with a significant number of spare rooms, you will need to invest in a new property in order to set up a B&B business.

In most cases, that will mean taking out a mortgage. But what sort of mortgage will you need? And how much deposit will you be expected to pay when you buy your bed and breakfast?

As with any mortgage, different lenders will have different requirements when it comes to deposits for a B&B. The type of mortgage you will need will depend on a number of factors, including how much of the total space in the property will be used for commercial purposes.

Deposit for a commercial mortgage

In most cases, if you are using less than 40% of the property for personal use, you will require a commercial mortgage, or a semi-commercial mortgage.

Most commercial mortgages require a deposit of between 30% and 40%, depending on the level of risk they deem your business to come with and the type of commercial mortgage you have applied for.

Buying a B&B without a deposit

Whichever way you buy your B&B you will need a deposit.

If you don’t have a cash deposit for your bed and breakfast, you may be able to release equity from your existing property or another property to release the necessary funds for the purchase of the new B&B and Stewart Hindley can help with this.

If you’re considering buying a bed and breakfast, it’s important to speak to someone experienced in the hospitality finance 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.

4 Tips for Appliance Safety in Your B&B

Beckie Hatton is a Product Manager at Home Appliance Care, so she understands exactly how important it is to have safe and efficient electrical appliances. Here, she offers her advice to B&B owners who want to follow the rules and keep guests safe.

All B&B owners have a legal responsibility to safeguard the public and their employees from harm (legislation.gov.uk). More specifically, you must make sure your electrical appliances are well-maintained and fit for purpose to prevent fires, gas leaks, electric shocks, and other disasters.

Small hospitality businesses that fail in their legal obligations can face serious consequences, from penalties and lawsuits to property damage and fatalities. So, it’s important to stay on top of maintaining the electrical appliances in your kitchen, guest rooms, and communal areas to keep your guests safe.

Below, I’ll be sharing some of my tips for making sure the appliances in your B&B are safe to use.

Which appliances to check

Any utensils and appliances that are battery operated or can be plugged into the mains must be well maintained and regularly reviewed. You should check them for signs or wear or damage at least once every month as part of your fire risk assessment (gov.uk), and they will have to be serviced or PAT tested every 6-12 months to be declared fit for use (pat.org.uk).

When you first think about which appliances in your B&B could be considered high-risk, most people rightly think of ovens, toasters and straighteners that are designed to heat up. But washing machines and tumble dryers account for more than a third of domestic fires, significantly more than cookers (11%), so it’s crucial that you keep on top of the maintenance of these appliances in particular (Which?).

Should I call an engineer?

You should contact an electrical engineer if you have any concerns about the internal wiring of your appliances rather than attempt to fix them yourself. Tampering with electrical systems can cause injuries or fatalities, and if you don’t have the right tools or knowledge you could put yourself and everyone else on the premises at risk.

Plus, tampering with your appliances usually voids their warranty and your insurance policy, so you’ll have to cover the cost of repairing and replacing any damaged machines. It’s safer and cheaper overall to let the professionals deal with it instead.

Common faults to watch out for

External issues like loose plugs, switches and outlets can often be amended by a quick screw retightening, and you can also replace any broken casings yourself using just basic tools and knowledge — but you must switch off and unplug everything first so there’s no electrical current.

If you notice your plugs, outlets and switches are getting warm, it could be a wiring issue that can cause a fire if not immediately fixed. In this case, these will need to be repaired or replaced as soon as possible and you should not attempt to use the appliance while you wait for the electrician.

Flickering lights or displays on your appliances, as well as your bulbs burning out too quickly, can be indicators that there is a loose connection somewhere inside the machine. If you notice any of these problems, you should stop using the appliance and call a professional immediately.

How to look after your appliances

Never skip your monthly fire risk assessments, annual services, or scheduled PAT tests. Fires and other electrical dangers don’t just happen as the result of faulty products — appliances that aren’t properly maintained pose a risk too. Failing to clean them properly, check them over regularly, and take care of small problems can lead to huge disasters, so you must have adequate maintenance strategies in place to tackle all these issues.

Encourage your kitchen staff to clean appliances at the beginning and end of each day to prevent build ups of food crumbs, grease and other debris — just be sure that they follow the manufacturer’s instructions for doing this safely. Cleaning in a way the manual suggests will also protect your appliances from corrosive damage which can lead to electrical issues, such as loose wiring. So, hang onto your user manuals and double check all their cleaning practices are compliant with the manufacturer’s suggestions.

These are just some of the ways you can make sure the appliances in your B&B are as safe as possible. By giving them a quick look over as often as you can and promptly reporting any issues to an electrician, your appliances can be safe for use and you can get on with managing your guesthouse.