Jon Salisbury

Post-Brexit tourism unlocking potential for hospitality sector growth




The drop in the value of sterling following Brexit has undoubtedly left many businesses in deep water, with import costs rising. On the other side of the coin, however, are sectors such as the UK hotels that may have benefited from the collapse in sterling.

Official figures show that international visitor numbers to the UK rose by 9% in the first six months of this year. At the same time, the weak pound and falling rate of disposable income has also prompted more Brits to holiday closer to home, rather than going abroad. As a result, the UK’s hospitality sector is enjoying a sustained period of growth. 

In fact, our figures show that at the UK’s top 500 hotel companies turnover increased by 5% last year – adding £600m to reach a total turnover of £13bn.

However, it is important to ensure that both the longevity of this growth and the industry is not left at the whim of currency fluctuations. Hospitality businesses should be looking to seize a golden opportunity to upgrade their services. This might involve increasing capacity or upgrading existing facilities. Alternatively, a competitive edge could be gained by adding a state-of-the-art gym, swimming pool or by adding spa treatments to visitor offerings.

A longstanding problem faced by SMEs in the UK’s hotel sector has, however, been accessing the finance they need to undertake such initiatives. Raising the capital investment for these smaller ventures can be particularly challenging for what are largely cyclical businesses. Indeed, smaller hotel operators tend to find it extremely difficult to obtain funding from traditional high street banks, no matter how successful they or their business plan may be.

Alternative options – such as bridging or traditional loans from specialist non-bank lenders – can provide an answer for many SMEs in the leisure sector looking for a cash injection. These providers are able to get much closer to the businesses they work with than the larger institutions tend to be able to. Genuine relationships can be built with the flexibility to provide the finance a lot of smaller businesses need to flourish.

Alternative finance providers – who often act as partners – can use their personal judgement, rather than relying solely on desktop due diligence based on a small number of financial metrics. It means that repeat business deals can be agreed based on previous experience – as well as a business’s financials – that could allow hospitality businesses to get much more than a one-off benefit from sterling’s fall.

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