We were joined by Kate Nicholls OBE, CEO of UK Hospitality and Darren Sweetland, MD of Mollie’s Motels at our recent Hotel Summit.
Key messages were engage your employees, face sustainability and embrace the future. The industry needs to hunker down in the short term but the overall message was that the future is bright.
A hard hit industry
As an industry, the hotel sector has faced numerous hurdles and barriers over the last 36 months; with Brexit and the pandemic to name just two, and now the energy crisis is taking its cut. Things have been extremely tough. The industry was, as Kate so poignantly articulated “hit first, hit the hardest and hit the longest” with some hotels only recently seeing international trade starting to return. But all is not lost – a resilient sector, we are told growth is now 6% above the pre-covid levels ultimately with a 10-15% price increase driving that revenue growth. The next 12 months is not going to be plain sailing and Kate indicated that we should all buckle in for a bumpy ride keeping in mind that there is light at the end of the tunnel.
Challenges for next 12 months
The key challenges for the sector for the next 12 months included:
The opportunity is there to grow demand we just need to embrace it! With Accommodation BIDs, increased international footfall and, as Darren alluded, no signs of the desire for staycations waning there is scope to grow demand – the industry needs to continue to entice growth through its doors.
Meeting that demand
It goes without saying that it is no good growing demand if the sector cannot meet it. Hotels will need to bare the cost of weathering the storm. With concerns over rising energy costs and food inflation, outgoings are skyrocketing whilst staff levels remain low with Brexit still taking its toll.
Kate indicated that more than 50% of the industry are worried that they cannot afford to meet increasing costs without working at a loss. Darren highlighted that some cannot open all their rooms to meet increased demand because of a lack of staff.
What can the sector do to encourage staff?
Kate’s view was that, whilst energy costs will be an ongoing challenge, operators need to make the sector a career of choice for the workforce. Darren was clear that, from his experience, investing in employee satisfaction and retention by dedicating time and money to staff and their career progression will pay dividends later. Partnering with local charities to bring in staff, working with local schools and colleges, rotating employees round departments, changing historic working patterns to a more attractive structure and marketing the industry as a rewarding and exciting career were just some of the encouraging ideas tabled at our summit. Darren discussed how Mollie’s have invested successfully in technology to assist with rotas, staff engagement and day to day operation of their hotels.
Seen as an unwelcome burden at this time for some in the industry, most are engaging in the need to look to the future. Darren eloquently engaged attendees in discussion around ECVI charges and opportunities, energy use and building standards through to employment policies to reduce staff energy usage, limit daily activities and reforming the view of the customer. Darren encouraged owners to reform their view of sustainability being an unnecessary cost to a healthy long-term gain for quality of service, customer satisfaction and reduced costs in the long term.
With debt levels high, the energy crisis to weather, and delays in planning and construction, private investment in the sector has stalled. Whilst Kate continues to lobby for a reform of business rates and a review of capital allowance to alleviate costs, she urges the sector to explore ways for hotels to level their debts. Ultimately, Kate advocates hunkering down to get through the next 12 months and presses the need to keep fighting for our hospitality industry.
The future looks bright
Despite the hurdles above, it is not all doom and gloom. With travel restrictions finally diminishing in China and the Far East, next year’s international footfall is predicted to return to pre-pandemic levels inevitably giving the sector a much needed boost. Hotels are already rising to the challenges and meeting rising demand, and with potential for unlocking investment as the economy begins to stabilise, the future looks bright. With 5% year on year growth expected, Kate’s overarching message was a welcome one – strong recovery is to come!
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