What 2019 holds in store for UK hoteliers

>>What 2019 holds in store for UK hoteliers

2019 looks like being the year of uncertainty, says hotel consultant Melvin Gold FIH, and not just for hoteliers. Some will see uncertainty as opportunity, others as threat, but in any eventuality it will be a year in which hotel management earn their salaries.

Understanding the operating environment and taking appropriate decisions will be the key to success. The issues are well documented but let’s recap.

The political and economic environment is dominated by Brexit which, at the time of writing, seems set to take place formally on 29 March 2018. However that date will likely herald a period of transition where not much will change and negotiations between the UK and EU continue.

Property tax relief?

The uncertain environment is likely to continue recent trends where cost pressures exist in the labour market and in the costs of food and beverages. Energy costs are under pressure as well, albeit for different reasons. Relief may come to some hoteliers and restaurateurs, especially smaller operators, as the government revisit property taxes to some extent. While those issues challenge UK hoteliers, overseas hoteliers will have to take account of the potential impact on UK travellers, whether for business or leisure.

If Brexit goes badly or inconclusively there may be further currency devaluation which would make the UK more attractive as a destination from a cost perspective but exacerbate operator pressures on costs and labour. On balance let’s hope that doesn’t happen.

Top of the cycle

The trading environment is tough anyway. Most expect that we are around the top of the trading cycle and we remain a cyclical industry. PWC stick their necks out each year with their industry forecast and for 2019 forecast trading at fairly similar levels to 2018, albeit when inflation is factored in that forecast is negative in real terms in both London and the UK regions.

Influences on this are not just the economy and the current trading cycle position but also the significant volumes of new supply that have come into the market in 2018 with more to arrive in 2019. A total of more than 20,000 rooms per annum in each of those years is estimated by STR. This is no longer predominantly in the branded budget segment of the market as a more positive phase of the development cycle comes to fruition.

Brand growth

Exclusive research by Melvin Gold Consulting shows that in 2017, for the first time, the majority of hotel bedrooms in the UK were not operated by independent hoteliers.  The combination of corporate chains and hotel consortia surpassed independent stock. There is no going back given that the vast majority of hotels under development are corporately branded the trend will continue in line with the expectations of our forward-looking report first published in 2007 and updated in 2011. It is exacerbated by the closure of outdated stock, mainly independently operated.

Times are changing in so many ways and it is unproductive to look back, but equally we must prepare for the future whatever it may hold. For every hotelier that means adjusting to circumstances and ensuring that our hotels – whether Independent or corporate – are best placed to take advantage of the opportunities that are out there.

Melvin Gold FIH is a leading independent hotel consultant and commentator. More about him and the range of services offered by his company can be found at: www.melvingoldconsulting.com 

Melvin will be expanding on the themes of this article in his Webinar for the Institute of Hospitality, free to members, on 8 January 2019. Book your place now.

 

 

By | 2018-12-31T10:50:00+00:00 December 31st, 2018|Brexit, Economy, Events, Finance, Statistics, Webinar|