The Cumberland leads the way in hospitality lending

Published on
22 July 2022

The Cumberland Building Society is looking to grow its lending to hospitality businesses by as much as 25 per cent this year.

A specialist lender to the sector, it has built up a portfolio of customers operating hotels, guest houses and self-catering accommodation not only on its home patch in North West England but across Yorkshire and the North East, the South West England and throughout Scotland.

The society introduced a relationship manager structure last October as a springboard for further growth.

At the same time, it strengthened its team by bringing in bankers such as Scott McKerracher, Head of Commercial, who arrived with 37 years’ experience of lending to hospitality with Clydesdale / Yorkshire Bank and Bank of Scotland.

Scott says his team have a target of increasing lending to hospitality businesses by 25 per cent, adding:

“Every customer at The Cumberland now has a relationship manager who really understands their business and the sector. We have people on the ground in all the areas of the country where we lend. That creates trust and it provides a lot of value to customers – the feedback has been terrific.”

He added: “We’re doing what the banks used to do. They used to have relationship managers but in recent years have tended to centralise. Customers get pushed to call centres. They are desperate to have someone they can speak to who knows their business.

“Our customer retention rates are very high, and the new relationship manager model will only strengthen that.”

This year, for example, The Cumberland was able to support Steve and Hayley Hallsworth in realising their ambition to purchase a Lake District bed & breakfast.

They took over Jericho’s boutique guest house in Windermere, moving up from Staffordshire to begin their new adventure. Steve described The Cumberland’s role as “pivotal” with a predicted three to four month process completed in just over eight weeks.

And further afield a team of renowned entrepreneurs, philanthropists and investors were among those to be supported this year by The Cumberland. They secured the purchase of an award-winning self-catering escape located in the North Devon coastal village of Lee, aided by a multi-million pound finance package from The Cumberland Building Society.

Director of Pickwell Ltd, Steve Baker, purchased the property alongside wife Susannah, as well as close friends and business partners, Richard and Tracey Elliott. In addition to providing outstanding accommodation in the South West, they plan to implement a series of sustainable initiatives within the business, mirroring the principles of their current luxury accommodation and tree house business, Ravendere Retreats.

Typically, the Cumberland provides loans from £150,000 up to £5m – the average is around £1m – advancing up to 65 per cent of the valuation. Most customers are owner-managed businesses.

The society’s customer-focused approach proved its worth during Covid-19 when lockdowns forced establishments to close only for bookings to soar as a boom in staycations followed the lifting of restrictions.

Scott said: “I joined the Cumberland halfway through the pandemic and saw straight away what a great job our people were doing, spending time with customers to understand their particular situation.

“Everybody’s circumstances were different, and we had to find different ways of supporting them whether that be mortgage payment holidays, signposting them to grants and advice, or extending overdrafts or lending.

“The approach has paid off as we have seen businesses recover and arrears levels drop.”

Some businesses took on debt to see them through the lockdowns or to invest to enhance their offer once the pandemic was over.

“We’re now dealing with customers who want to restructure debt to support their strategy going forward,” Scott said. “We’ve done quite a lot of that.”

With hospitality in recovery mode, The Cumberland is seeing healthy demand for new lending. Hence the plan to grow its loan book during 2022.

And while the sector faces headwinds such as the cost-of-living crisis and difficulties in staff recruitment, Scott remains optimistic.

He said: “When someone approaches us for lending, we look for robust cashflow and we look at how the business traded before and through the pandemic and the outlook going forward.

“Whatever happens to the economy, we’ve no doubt that businesses with good management in great
locations will continue to do really well.”