Louise Gillon, head of hotel finance at Leumi UK, explains how the role of specialist lenders can support the new generation of lifestyle hotels.
While businesses have been forced to tackle unprecedented setbacks due to Covid-19, hoteliers have been working behind the scenes to bring new life to the industry. In London, the innovative lifestyle hotel trend is taking centre stage – promising guests a modernised, alternative hospitality experience. However, when it comes to financing these emerging establishments, many banks and lenders are somewhat behind the curve.
The past year has heralded a number of significant changes for society. Among them, the evolving attitudes and demands of consumers, with a growing tendency towards conscious consumption, are inciting meaningful change in businesses across the spectrum. The hotel industry is no different, and innovative new developments are transforming the face of London’s hospitality scene. Defining the next generation of hotels in the capital, such projects aim to provide a more rounded, personalised experience for visitors – maintaining a sense of luxury and elegance without compromising on a relaxed, homely atmosphere.
There are a number of exciting initiatives taking off in this area. Shiva Hotels, for instance – the esteemed hotel operator that is at the forefront of this new generation – opened two such establishments last year. Providing guests with an experience-centric getaway, the relaxed, boutique set-up of hotels Middle Eight and The Guardsman enabled the hotelier to successfully launch despite the ongoing disruptions of the pandemic – with its offering providing an attractive option for ethically conscious guests looking for a warmer, more personalised alternative to London’s typically more sterile luxury offering.
Certainly, the buildings – which were heavily repurposed in line with Shiva’s vision for a new type of city experience – epitomise this growing trend. Rishi Sachdev, managing director at Shiva Hotels, notes that “while there is no doubt that the hospitality industry is still facing significant challenges, being able to successfully deliver two carefully curated hotels in sought-after locations is a testament to the capital’s resilience”. Situated in prime London locations and steeped in history, the landmark hotels have been brought into the modern day – redefining luxury hospitality. However, despite the potential of each project, finding a lender that shared the team’s vision was no easy task.
For some time now, larger financiers have favoured a system-based, “one size fits all” approach when it comes to lending – with increasingly burdensome regulation depleting their appetite for less traditional business propositions. With the added complications of today’s unstable economy as a result of the ongoing pandemic, this issue has only been magnified, creating an unfavourable lending climate for many. As such, finding a financier with both the appetite and open-mindedness to become a committed partner can prove cumbersome.
Yet it is not impossible. Enter the specialist lender: smaller, nimbler, and boasting a far deeper level of sectoral understanding and appreciation for market trends, such financiers are much more thorough when it comes to assessing boutique businesses. Indeed, in the current economy, partnering with a lender that boasts sector-specific expertise is key to garnering a more sympathetic approach when it comes to obtaining finance. A greater knowledge of common industry challenges means these financiers are far more flexible when providing funding solutions, while also giving them better insight into how more innovative proposals – such as those of Shiva Hotels – will play out in the long run.
Having spent many years working in the hotel sector, I have witnessed first-hand just how detrimental financing hurdles can be to boutique businesses – and in turn, how a flexible, understanding financial partner can make all the difference when it comes to realising a company’s vision. By taking the time to get to know a business and by considering the longer-term implications of its proposal, smaller lenders, such as Leumi UK, are able to look beyond any potential short-term macro-economic hurdles – instead favouring innovative businesses that incite meaningful change within the industry.
What’s more, we offer a much more personalised lending experience. Certainly, more specialised banks often act as boutique businesses in their own right, giving them a far greater understanding of the importance of creating long-lasting, personal relationships with clients – as well as the importance of building a reputable brand and image.
As the hotel industry continues to navigate the challenges ahead, uncertainties remain abundant. However, with the support of the right financial partner, this is the perfect opportunity for innovative businesses to play their part in the evolution of London’s hotel scene.
The coronavirus pandemic has reshaped what was once considered ‘normal’, with consumers also undergoing a seismic shift. Moving forward, society will continue to take a more conscious, connected approach to business and brand engagement, with ethics increasingly playing an integral part in consumer decisions. For smaller nimbler hoteliers, this process has already begun. Now, it is up to financiers to keep up with this transition.