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Why is investing in a mixed-use hotel business a sensible approach?

It’s likely you have some form of investment strategy when it comes to improving your business. However, before considering further or new investment, deciding on which areas to invest in and where to source funding, take a step back. A mixed-use hotel business is one of the best strategies to adopt.

The key to transforming the profitability of your hotel/restaurant business lies in thinking of ways to successfully use the space and the facilities on offer as optimally as possible.

If there are a wider number of uses for your hotel, it will be full more frequently which means it will be returning more revenue for continual re-investment and improvement.

Why is investing in a mixed-use hotel business a good thing?

  • You already have the infrastructure in place. It is being used and ready for increased use. The best way to increase revenue is to make better use of available assets.
  • A mixed-use hotel business allows you to build additional and quantifiable revenue streams.
  • A mixed-use hotel business helps owners and managers to access new and wider customer audiences. This might open up entirely new clusters at different times of day which may lead to repeat bookings, using facilities that might otherwise sit unused at certain times of day.
  • Optimising use of available space will directly impact on occupancy and revenue.

Impact on the kitchen

Firing up a kitchen costs £100s every day with the additional labour costs of having a chef not generating revenue if the dining room isn’t open until 6pm. As with other areas of the operation, if it is working harder it is making more from the facilities.

This may not necessarily be a direct contribution to the bottom line, but it certainly impacts overheads.

Impact on space and room bookings

Space is a valuable and expensive commodity in hotels and restaurant businesses. Empty, dormant rooms are a problem and need to be maximised. As a hotelier you are paying for a fair amount of space, either in rent or in energy costs, so consider transforming dead areas so they begin to make a return.

Whilst there are benefits to a marginal costing model on selling guest rooms and filling the hotel, discounted hotel rooms are less likely to deliver the type of guest with high discretionary spend.

Alternative finance looks at the sorts of things banks don’t always finance. They prefer the solid value of bricks and mortar. Specialist alternative finance providers will see the commercial value of business-critical assets, including fit-out.

Further reading:

Why the time is right to invest in your hospitality business.

A mixed use hotel fit out finance case study.

 

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Why the time is right to invest in your hospitality business.

The UK hospitality sector is worth £100 billion a year having grown at around 6% over the last five years.1 With over 200,000 businesses providing accommodation and food services in the UK, it is more important than ever to provide the best possible experience if you are running a hospitality business.

Investing to grow is a well-developed strategy in the hospitality space, an investment cycle now reduced to around three years.

But what to invest in… and how?

There are the obvious bricks and mortar investments that the banks will help you with.

But what about kitchen equipment, bar backs, bar and dining room furniture, lighting, room theming and artwork, extensions, fit out, leisure facilities and the less obvious things such as carpet, lighting (interior and exterior), curtains, blinds, soft furnishings, reception areas?

PwC also recently reported that 2018 has been a boom year for the hospitality sector. 

There has never been a better time to invest in your hospitality business. And the power of alternative funding models – puts business growth right in the palm of your hand.

1 https://www.thedrinksbusiness.com/2018/06/uk-hospitality-sector-could-be-worth-100-billion-by-the-end-of-2018-despite-closures-and-staff-shortages/

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Hotelympia 2018 exhibition review

Hotelympia 2018 exhibition review

As a first-time exhibitor and visitor, and as a relative novice to exhibitions, there was plenty to see and plenty to learn at Hotelympia 2018. This post explores what we saw and offers our view on the best stand experiences.

Hotelympia, which runs in London every two years and next appears in March 2020, welcomed over 750 exhibitors and thousands of visitors.

I will freely acknowledge that the Fit Out Finance stand won’t win any design awards, though fortunately our stand did its job as a meeting point for both suppliers and customers with an interest in funding.

Fit Out Finance at Hotelympia

Using my own criteria, I thought it would be interesting to evaluate my personal top 5 stands of the show.  This chart isn’t compiled based around glitz and budget but around the buzz, the passion of the stand holders and the products on display themselves.

In traditional reverse order, here they are:

 

NUMBER 5:  Food & Drink Wales

Food and Drink Wales at Hotelympia

With some bias, an interesting and diverse stand of Welsh food producers – from wine to cheese, from cured meats to salt. Foods could be tasted, there were lots of demonstrations, it was well branded at height making it very visible and they used big screens too.

And they had Welsh cakes, which must make them a winner.

 

NUMBER 4: Beverlecs

Beverlecs at Hotelympia

Hidden away at the back of the show was Beverlecs; a father and son business who have dedicated themselves to creating a single solution to many of the front of house issues facing hotel bars.

Exhibiting pre-launch this unassuming stand – with a solitary demo on display – was attracting attention from the right people, including key people in some major chains. Definitely a case of passion winning over budget! Lesson: Understand your niche and deliver specifically for it.

 

NUMBER 3:  Blue Ice Machines

Blue Ice Machines at Hotelympia

Again, nestled at the rear of the Professional Kitchens section, the positioning didn’t seem to adversely affect Blue Ice Machines who had a steady footfall of interested customers, many of whom made purchases on stand during the show.

The buzz was in no small part down to the enthusiasm and cheer of owner, Mindy Rubin who was pretty much constantly engaged in discussion with interested parties.

The stand budget was mostly spent on demo machines (and free ice cream) – which evidently had a magnetic effect.

 

NUMBER 2: KMS

KMS at Hotelympia

The buzz for KMS came mostly from the display of innovative technology including smart mirrors and digital coolers, all of which were displayed on a stand designed to take potential clients through the customer journey from arrival – EV chargers and external weatherproof digital displays –  to departure. Bright, colourful and technologically enticing.

 

KMS owner Emlyn Cole-Jones has built the business over 15 years and was on stand for much of the show. A recurring theme perhaps?

 

NUMBER 1: Rationale

Rational at Hotelympia

OK, so this clearly is a big-budget show stalwart, who splash out on pole position, staff and top-notch display equipment.

However, they use the budget well to create the biggest, most consistent buzz of the show.

The star of their own show has to be the man who I now know to be Alan Evans – part entertainer, part chef, part cooker salesman. Alan takes the selling of industrial cooking equipment to a whole new level! Add to that the fact that their food is superb, Rationale definitely have to take top spot on this chart!

 

And a word on competition

From a Fit Out Finance perspective, the only putative competitor, Grenke Leasing, was on the stand next to us. In reality though, they aren’t a true competitor, they are a principal lender whose focus is wholly on IT and tech, which constitutes a small percentage of what we do at Fit Out Finance. As is often the case, far from competing we shared insights and even possible enquiries over the four days.

 

Summary

We had a rewarding, if exhausting, time at Hotelympia, spending most of the four days of the show engaging with fellow exhibitors (who it transpires could be a lucrative route to market) as well as interested delegates.

We’ve come away with a much deeper knowledge of how the hotel sector works and will be even better placed to help ambitious independent hotel owners realise the hotel businesses of their dreams

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