Securing investment 'major challenge' for independent hoteliers

By Emma Eversham

- Last updated on GMT

Related tags: Hotel

Industry experts say that lack of funding available independent hotel operators is hampering growth in the sector
Industry experts say that lack of funding available independent hotel operators is hampering growth in the sector
Independent hoteliers say securing funding for their business is a 'major challenge' despite the growth in spend across the sector. 

Speaking ahead of the Independent Hotel Show later this month, Pride of Britain Hotels chief executive Peter Hancock and Tom Bell, editor of Alistair Sawday’s British Hotels and Inns, who are both judging the Independent Hotelier of the Year Award, said access to finance was one of the key obstacles currently faced by independent hoteliers and was hampering growth within the sector. 

“I haven't seen a rise in the number of small independent hotels in the last few years - on the contrary, I've seen a big drop in new openings as banks are loathe to lend in this sector - understandable given footfall and prices in most hotels remain depressed," said Bell. 

Hancock and Bell also said the current financial landscape was making it difficult for the industry to attract new talent and provide them inspirational training programmes. Hancock said lack of funding was a 'massive hurdle' to growth, particularly for hotels situated outside London. 

Budget hit

However funders and property agents disagree that lack of funds are hampering growth with some markets, such as the Cotswolds, thriving and some agents unable to find enough hotel properties to meet demand.

Andrew Taylor, head of commercial banking at NatWest and RBS, said funding was available for interesting new projects, but recognised that growth had been hit. However, he blamed the booming budget sector for hitting independents hard in recent years. 

He said: ‪"Around 17,000 new rooms opened across the UK in 2012 and 12,000 of them were in the budget sector so I think expansion is still there, but it is being driven largely by the branded budget sector rather than the established independent hotel sector.

"As an SME lender much of our focus is on independent hotels. Whilst we are not seeing huge demand for new openings we are seeing and supporting a number of interesting projects from refurbishment, extension, addition of spa/leisure facilities and in some instances switch to branded from unbranded. We have remained a lender and supporter of independent hotels through this period and have established a dedicated Leisure Fund to help support businesses across the industry."

Riding out the storm

Despite investment difficulties, Hancock and Bell acknowledged that some independent hotels had been able to 'ride out the funding storm' through the consistency of excellence in their service and overall experience.

“Whilst there has been little growth in the number of new openings year-on-year, we are at last seeing an increase in the amount of business existing sites are doing, especially at the luxury end of the market. The Independent Hotel Show 2013 will provide a perfect opportunity to debate how this increase in sector spend has manifested itself and celebrate independent hoteliers work in strengthening the industry over the last few years.”

The Independent Hotel Show will take place at Olympia West Hall on 30 and 31 October 2013. The Independent Hotelier of the Year 2013 will be announced at a special ceremony on the first day. To register to attend click here.

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