The future of hospitality depends on SMEs, but finance holds them back

Peter Lochbihler, the Global Director of Public Affairs for Booking.com, has called for better access to resources – including capital – for SMEs to help them better compete with big brands. 

Lochbihler, a key figure in the hospitality industry, said that small hospitality business owners pack as much of a punch as big companies’ leaders when it comes to capability and ambition, while providing “diversity, innovation, and regional cohesion” that big brands simply can’t deliver.

However, with confidence among hospitality businesses low and costs high, Lochbihler argued that more needs to be done to help SMEs get financing to take advantage of their strengths.

Inability to access finance blocks innovation

In his op-ed, published by Hospitality Net, Lochbihler stated that “access to finance remains the most visible dividing line” between SMEs and the larger chains. He added: “While larger hotels report relatively easy access to funding, SMEs still face tighter credit conditions and smaller margins for experimentation.”

It is experimentation – the ability to offer something unique and diverse – that sets SMEs apart. The inability to get the funding they need stops small businesses from innovating, which is essential to counter the impacts of the difficult climate in the UK, currently fuelled by high business rates and high staffing costs. The alcohol duty increases from February 2026 are also causing some consternation. 

While some savings are predicted with the upcoming implementation of the much debated Workers’ Rights Bill and licensing reforms, Lochbihler, among others, suggested that the financing models need to be changed wholesale in order for SMEs to flourish in hospitality.

Another voice calling for better access to funding

While the op-ed looks at the hospitality industry across Europe, in recent months, there have been increasingly loud calls in the UK specifically for financing for SMEs to be overhauled. 

There have been calls this week to reform the Bank Referral Scheme, as it is not delivering the impact hoped for SMEs. And last week, a group of Labour backbenchers announced a bill that would see banks required to up their lending offerings for small businesses, and also be held accountable for their impact. 

Former business minister Gareth Thomas tabled the bill, and commented on LabourList: “Thousands of small and medium-sized businesses are currently locked out of the finance they need to grow […] Too many are left without advice, support or a fair chance to turn good ideas into thriving businesses.”

Lochbihler reiterated this, determining that skills and access to finance are the base of the growth pyramid for SMEs. He wrote: “Without vocational and digital capabilities – and reliable, affordable capital – SMEs cannot modernise or scale. This is the groundwork on which everything else rests.”

Reasons to fund hospitality SMEs

With finance reform, Lochbihler argues that SMEs can continue to do what they are good at – namely, offering a unique customer experience and differentiation from the chain brands, and with this, achieve higher profitability and better resilience, and create more diversity and innovation in the sector.

With huge technological change happening now, SMEs must be on board to take advantage of the possibilities. “A new wave of travel technologies – from artificial intelligence and data analytics to augmented and virtual reality – is reshaping the accommodation industry,” he wrote.

However, implementation costs and the challenges of integration and finding expertise are holding small businesses back. Again, these are issues that improving access to financing and lowering the compliance burden can mitigate.

The overall message? If SMEs can get better financing, they will be able to compete with large chains – and this is necessary for hospitality as a sector to thrive.

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Planet of the Grapes founder Matt Harris has over 25 years of experience in hospitality. Read his bi-monthly column for Startups now.

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