A reflection of 2021 and hospitality sector predictions for next year and beyond
This year we have been expanding our commercial team at The Cumberland to offer first-hand support to the hospitality sector across the UK.
Our new head of commercial, Scott McKerracher, joined in March, bringing with him more than 30 years of experience in commercial banking, and has already expanded his team so that it now has people based in Devon and Cornwall, Yorkshire, the North East, Scotland and additional colleagues in the North West.
The Cumberland has a strong tradition of supporting the UK’s hospitality industry and Scott has been working on a strategy to build on this success and double the size of our commercial business over the next three years.
“We have increased the commercial team by about 40 per cent which is an exciting development and a substantial investment for The Cumberland,” Scott said, adding: “I am a firm believer in having experienced bankers in the team who focus on a particular geographical area, get to know the businesses they support, and the people within those businesses”.
We have recruited a number of colleagues to grow our team serving Cumbria and the North West where we have 50 per cent of our commercial business. We now have a representative based in Devon focused on the South West which accounts for another 25 per cent as well as members of the team in the North East and Scotland. These people are well placed to support hospitality businesses into 2022 and beyond.
A record-breaking November
In November, The Cumberland for Commercial team reported the highest commercial lending figure to hotel and guest house businesses since 2016, including businesses across the UK, from Cornwall up to Scotland.
Grant Seaton, Senior Commercial Manager, said: “We saw a huge increase in the total commercial lending figure in November compared to previous months throughout the year which is a real reflection of the strength of the expanded commercial team here at The Cumberland. The best monthly lending figure we have ever recorded was £8.16 million in November 2016 and it’s fantastic to see the extent to which we have exceeded this last month”.
Predictions for 2022
Looking ahead to next year, Scott expects the current challenges faced by the hospitality sector to continue with staff shortages and inflationary pressures adding to the sense of instability.
“One of things The Cumberland has done really well is supporting existing customers through
the pandemic and we’ll continue to provide as much cash flow support as we can,” he said.
“And as the economy continues to recover there will be inflationary pressures and the prospect
of increased interest rates to contend with. Many customers are also telling us they are
struggling to find staff.
“All this does create some opportunities for businesses - the ones that are well capitalised and
have a decent amount of liquidity will do really well. So we have had a lot of businesses
snapping up good opportunities to buy another hotel or holiday let,” he added.
But Scott is concerned that more debt-laden businesses might struggle as repayments for
HMRC deferrals and coronavirus business interruption loans kick in.
“I think there will be a lot of restructuring work required to help businesses through which will
involve reviewing the overall debt in the business and looking at the totality of it, against the
sustainable cash flow in the business.
“We have some very experienced bankers in our team. I have briefed them that we need to help
businesses by looking at their finances over three stages - two or three years pre-pandemic,
what happened during the pandemic, and what they are forecasting for the future.
“There is a risk that some businesses might not survive because of the layers of debt they are
carrying. We want to help those businesses to breathe and see them through what might be a
difficult period.”
And Scott has some advice for all businesses garnered from his extensive experience in
commercial banking: “I would suggest to businesses that going into 2022 they need to manage
the cash really, really closely, given the likely impact of rising costs and interest rates.
“It is absolutely crucial to do this in a volatile environment with big highs and lows in it. You
might have had a really strong trading period, but don’t get blown off course by that too quickly.
“I would also urge people to keep an eye on the bigger picture of what’s going on in the market.
Try and keep across that as much as you can so you see what’s going on with the economy and
how it’s going to impact on you.”