Right at HOME
The UK hotel industry is facing a number of Brexit-related challenges but has received a timely boost from the government. Catherine Chetwynd charts the changes
In June, the UK government announced it would be making a significant investment in tourism and hospitality to help reaffirm “the UK’S global role as a key player in the industry”.
It has committed to adding 130,000 new UK hotel rooms by 2025 – 75% of which will be outside London – and to deliver 10,000 new apprenticeships in the sector every year.
In addition, it will invest in broadband connectivity for UK conference centres to boost business travel and develop a strategy to grow off-season travel.
The positive news for this important economic sector comes at a time when the prospect of leaving the European Union is causing headaches for many hoteliers.
“The biggest concern that Brexit brings for the hospitality sector is how it could affect staffing,” says SVP Hotel Solutions for BCD Travel, April Bridgeman. “Hotels in the UK rely heavily on overseas workers, many from other EU states. If that labour force leaves, by choice or by policy, hotels will face a shortage of labour and if that has to be filled by local staff, costs will go up which, in turn, will increase room rates.”
Brexit isn't all bad
However, Advantage Travel Partnership’s Hotels Market Report (January to March) shows a positive picture compared to 2018: UK room nights were up 5.1%, London room nights up by 5%, Portsmouth up 68% and York up 82%. In addition, a further ten towns showed a growth of more than 20%.
London remains buoyant and seems to be a microclimate amid the rest of the country. Hotel numbers continue to grow apace and as soon as they open, beds fill up and average room rates climb. Bookers are getting wiser about booking in advance but high demand is putting pressure on corporate relationships. Conventional wisdom might dictate that with properties springing up all over the country and business slowing down, that competitive corporate rates should be plentiful. However, the problem is not negotiating them, it is being able to use them.
“In London, hotels are happy to give good rates but they are apprehensive about how much volume corporates are going to give,” says Managing Director of Sirius Management, Tom Stone. “You might think the more business a company gives a hotel, the cheaper it’s going to be, but the pace in London is so great that a hotel will give a rate on only 100 or 1,000 room nights, not for the 30,000 a buyer can potentially give.
“And there is an elephant in the room. A lot of hotels that work with corporates want to do so on the basis of longevity and as a partnership but hotels in London are generally privately owned and managed by chains. This means owners are constantly putting pressure on management teams – the GM, revenue manager or sales manager – to deliver higher yield on the rooms and that sometimes doesn’t lead to a feeling of partnership with a corporate. There is nowhere outside London where occupancies are so high that that applies,” he says.