As delegates prepare for next weeks #Annual Hotel Conference in Manchester the industry is having to adapt to a wide range of issues, opportunities and challenges:
Will the next Budget treat the industry as the growth sector it is-or as one perceived as simply a low wage employer?
After a previous Budget battering that led to:
- vastly increased operational costs (through imposing increases in minimum wage and National Insurance Contributions).
- further restrictions on the flexibility that is core to the hotel operating model from the impacts of the Employments Rights Act .
…we hope the stars now better aligned for a more sympathetic government view in next months Budget.
When will the cranes come back? Across the UK hotels are seen as core to the placemaking ambitions of many regeneration led schemes….but viability challenges are stifling development.
- Construction costs remain high -investors are choosing to buy or adapt existing buildings as an alternative to new build.
- The race to create more brands with smaller rooms to counter development costs may become the new accommodation standards …but if so will the consumer accept this new level of offer?
…a longer-term investment view needs to prevail or a more holistic valuation model be created to enable the gap between cost and value to narrow and enable development to restart.
A.I. friend or foe? A potential risk is to see automation and AI as the ultimate saviour to reduce the cost challenge facing many businesses.At the extreme this can mean:
- minimising services, reducing the physical and service product and
- taking away any soft/emotional benefits to the consumer.
…operators need to adapt but keep the core offering and soft/emotional benefits to the consumer intact.
Despite these many challenges which hit smaller businesses particularly hard – many of which have led to closures and restructuring amongst the chain operators- the industry has met every situation head on.
- Product extended choice including pubs with rooms, non serviced stays and differing accommodation models/products has widened.
- Business models have been adapted, marketing evolved, hours of opening reorganised, menu formulations reinvented, administrative processes simplified.
- Demand for satisfying experiences stays remains strong and the sector is at the core of many vibrant aspirational community regeneration models.
To end, some choice quotes:
- “The industry needs breathing space to survive, invest and grow... The Government is making it harder to run a hospitality business in Britain than compared with rival European countries.” Tom Kerridge, campaigning against the UK’s 20% VAT rate
- Only the experience economy is capable of generating the jobs of the future...hospitality is a cornerstone of the experience economy (Andrew Sangster, Hotel Analyst)
- Artificial Intelligence: ‘the smartest businesses will automate the transactional and double down on the emotional‘ (Peter Martin, Peach 20/20)
Featured image: with thanks and adapted from, filip-mishevski-JO_mdVMl2G4-unsplash
