The Annual Hotel Conference in Manchester brought industry professionals together and covered a wide range of topics in an evolving industry backdrop… It ended with a fascinating insight into investment horizons (both short and long term) by the seasoned investor Luke Johnson who pulled no punches and was open about the challenges, but also thrills, of hospitality as a investment proposition.
Here are some brief take aways from some of the sessions attended and meetings held:
- A generally optimistic outlook operationally, with performance strong in revenue terms and recovering in profit terms
- Discretionary spend is being challenged…by high prices…there is evidence of some sensitivity to the rising cost of living impacting on some demand segments although ‘premium/luxury’ is still able to hold its own
- New build development is still restricted (despite words to the contrary) by financing and construction challenges and is focused primarily on conversions, upgrades or rebranding and key premium locations
- Financing may be loosening but remains costly although lower debt costs appear to be on the horizon
- UK is still seen as a market worth targeting for a presence by smaller offshore groups and independently funded businesses
- Hotels and events spaces are seen as key ‘placemakers’ with many Councils still having ambitions and aspirations to attract hospitality offerings to help regenerate city centres, where alternative uses are limited
- Local spending by event and accommodation visitors does genuinely have a ‘multiplier effect’ (as confirmed by the host venue, Manchester Central)
- Key brands with strong unique propositions -some with new ownership/financial backing- continue to have substantial expansion plans, despite increased supply in some markets
- New distinct concepts are emerging in the independent sector whilst major brand owners roll out (yet more) propositions expanding already full stables
- Contrarian views and approaches were on show as to how to deal with operational cost challenges -at one extreme cutting costs and service offer (‘your steak options are limited to medium or medium’ as food production is deskilled) through to operators using service, culture and personalised service to add value
- The sector still hopes for some benefits from the forthcoming Budget …demands are for rate system overhaul or a (less likely) Vat reduction
Some quotation nuggets from speakers in various sessions (apologies If I can’t recall who said what!):
‘Hospitality is a tough business but the status of the sector (and recognition of its importance by government) has risen’ .
‘Continual innovation is key and remains valid as a concept’ (Kaizen) –a seasoned investor (guess who?)
‘Complacency leads to take over’
‘The middle ground is not the place to avoid’ (a contrary view to a historical theory in most downturns)…a seasoned and highly successful pub owner and operator stated but admitted…‘Without data, its only my opinion’
‘Culture, internal discipline and a quality proposition are the keys to success’
‘Private equity’s short term approach can overload debt and limit potential’
Do contact Arc if you have any comments or opinions on these views to discuss them further.
Arc offers multi-disciplinary skills for a wide range of sector related projects. We welcome exploring opportunities in the sector where we can help provide insight into industry issues and appraise, asset manage or help implement investment and business related plans.
Direct Contact: e: douglas.grant@arcconsultingpartners.com T:0044 7785 514831
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Photo credit: Unsplash, Mohammad Alizade
