Businesses across the board have been battening down the hatches and taking a pragmatic approach to their spending as the UK faces further financial uncertainty.
Operators in the tourism and hospitality sectors in Cumbria have been hit particularly hard, with some 46 percent of businesses having seen a reduction in average spend per customer when compared to pre-COVID levels, according to recent statistics from Cumbria Tourism.
Those within the hospitality sector are feeling the strain, and the notion of expansion can seem like a daunting task. However, experts argue that expanding and investing in your business could actually be key to coming out stronger on the other side.
Matthew Hutton, Accounting Senior Manager at Armstrong Watson accountancy firm, said: “If your product and brand are strong, there is still plenty of opportunity for businesses in the sector to expand. Our clients are now starting to see the return to the area of the remaining overseas tourist trade that disappeared overnight during the pandemic.
“Expanding your current business now will help capitalise on this returning trade. There are currently opportunities out there to buy or lease new locations on favourable terms, given that some business owners may be looking to exit after a turbulent few years. Despite increased interest rates, there are still plenty of options for those looking to finance expansion.”
The Cumberland is one such lender that has been actively helping local businesses fulfil their potential and realise their aspirations, even throughout the ongoing cost-of-living crises.
Alasdair Swan, Senior Commercial Manager at The Cumberland said: “Supporting people and businesses within our heartland here in Cumbria has been at the core of what we do at The Cumberland for the past 170 years. We want to make a positive difference to people’s lives now and in the future, and we do this in a number of ways.
“Our people-first, face to face approach means that we take a holistic approach when it comes to supporting our customers, taking various aspects into consideration, ensuring that the correct funding structure is put in place.”
The Cumberland is but one cog in the machine which is looking to support businesses in their aspirations. For those looking to expand, solicitors, realtors, and accountants all play a vital role in managing the process, providing guidance, and above all, supporting hospitality owners in their endeavours.
While challenges are abundant, opportunities remain, particularly in Cumbria and the Lake District, where its picturesque views and dramatic landscape remain awe inspiring. Crucially though, the hospitality industry, particularly in Cumbria has risen to the challenges time and time again. Whilst the commercial market has seen a slower return to normality, the prospects for tourism or leisure-based business continues to remain positive. Pandemic driven staycations presented an expanded domestic audience of clientele appreciating what the UK has to offer.
Robbie Mather, Head of Commercial Property at Burnetts solicitors, said: “The hospitality sector in Cumbria is incredibly resilient. Look at what it has had to overcome in the past 20 years alone.
“The opportunities are still strong still strong on the back of the Lake District brand and the worldwide draw that the area has. Those that provide a truly unique experience, coupled with the beauty of the local landscape are those who will thrive.”
It is a sentiment which is echoed by Julian Troup, Head of UK Hotels, Colliers real estate agents, however he noted the volatility which the current economic climate is bringing. He said: “We have seen hotels located in remote areas that are trading highly profitably and then there are others located in prime and accessible locations that are hugely underperforming.”
While there are opportunities for businesses to expand, it’s important to avoid the pitfalls which may emerge. Moving too fast, without a clear plan can cause issues further down the line and result in catastrophic effects.
Those who have set off on expansion plans and have not fully costed financial needs against the usual business needs run the risk that expansion plans could stagnate. So, having a specialist lender such as The Cumberland, who knows the industry, the market, and has experience within the sector is incredibly important. The value from those who truly understand the needs and requirements of the hospitality sector is invaluable.
Mather continues: “I would advise those who are successful on expansion plans to have early discussions with their accountant to discuss tax and cash flow planning. They should also speak to legal advisors on business impact, property planning matters and employment requirements, and with their financial lender to discuss access to funds, the amount needed, timings of cash requirements and so on.”
Not hiring enough members of staff to cope with the planned expansion can see it fail to come to fruition, warns Matthew Hutton. He explains: “If you do not hire enough additional staff to cope with the expansion of your business, it may lead to your existing staff being overworked which could lead to reduced morale and a worse customer experience. Businesses should try to ensure that they are adequately resourced for an expansion by hiring new staff where necessary.”
While the prospect of expanding your hospitality business may seem a daunting task in the current climate, it is clear that there are opportunities for businesses to do so. Crucial to successful expansion is seeking and utilising the help and support of businesses who can empower them to do so. Organisations such as The Cumberland, Armstrong Watson, Colliers, and Burnetts are on hand to provide expert advice and services for organisations who wish to do so.
For more information on how The Cumberland can support your hospitality business, visit our business page.