With the school holidays on the horizon, hotel owners and the wider hospitality industry will be gearing up for what we hope is a busy British summer.

Despite the potential the season brings, many of the hotel owners and hospitality businesses I speak to remain cautious in their outlook. There are several reasons for this. First up, the industry – like the rest of the economy – has been impacted by the price of energy.

Conflict in Iran has driven up energy prices globally and, while many hope for a peace deal soon, energy price inflation is dampening consumer sentiment with the potential to impact summer bookings. Hotel owners have also been put under pressure by recent increases in national insurance and the minimum wage.

In an industry that is highly reliant on the labour market, these changes are hitting the bottom line and making decisions about extra summer staffing harder. Alongside these shorter term challenges, there are also deeper structural issues that the sector is being forced to contend with.

Banking on the hotel sector?

My team at Allica Bank recently undertook some research looking at the challenges hotel businesses face, especially established hotel businesses with between 5 and 250 employees.

Established businesses are key to the hospitality industry, representing nearly half of the industry in total. Alongside this, the sector adds nearly £70 billion to UK GDP and employs 2.6 million. In other words, hospitality is a crucial industry and key to the life chances of millions.

Despite this, business lending to the sector has reduced significantly in recent decades, putting businesses under pressure and putting plans to grow, invest and innovate on hold. This is especially the case for established hotel businesses. Recent decades have seen a £65 billion ‘lending gap’ emerge in the UK which has meant the loss of around £4.6 billion of potential lending to the UK’s hospitality sector.

This is vital capital that could otherwise be invested in upgrading facilities, implementing smart technology for booking and guest management, and training staff – all of which would enhance the customer experience.

Savings squeeze

On the other side of the ledger, our research also discovered that many hotel businesses are being short-changed by their business bank when it comes to savings.

Hotel cash flow can often be seasonal, meaning businesses can sometimes be sat on significant reserves during busy trading periods. This cash could be generating vital returns for hotel owners yet all too often isn’t. In fact, we discovered that many business savings accounts are offering zero or very low interest rates, costing the hospitality sector nearly £400 million in lost interest every year.

This is vital cash that could be used to help hotel owners navigate some of the short-term challenges in the current economy, but for many, these returns are going unrealised.

Better banking for hotel owners

Thankfully, recent years have seen significant diversification in the UK’s financial services landscape. This means there are a growing number of challenger banks out there willing to back hotel owners in the UK, support their investment plans and give a fair return on business savings.

As somebody who speaks with hotel owners across the country every day, I personally take pride in being able to find solutions for the businesses I work with, and there are several key pieces of advice that I give to those looking to access better banking.

This could be anything from simply switching business savings accounts to earn more interest to more bespoke finance based on business assets and growth forecasts. There’s no one-size-fits-all solution, but the first step is to understand that there is banking beyond the high street and there’s never a bad time to begin a conversation.

Download our full report on the UK’s hospitality industry here.

Allica is a bank built especially for established businesses with between 5 and 250 employees.

These businesses make up a third of UK employment and turnover, yet they’re overlooked by the big banks with a service that is increasingly impersonal, inconvenient, and poor value.

Allica Bank is on a mission to give established businesses the banking they deserve. That means a current account that rewards business owners for using it, a relationship manager whose name and number they actually know, and powerful tools and technology that make their life easier, not harder.

It’s how business banking used to be, just better.