UK hotels at critical juncture between better performance and looming recession
LONDON – Hotels in coastal and rural destinations across the UK have performed relatively well over the past two summers of high demand for stays, but as the pandemic subsides and international travelers return, there are fears that all gains are lost as the industry returns to normal demand patterns.
Another concern of independent hoteliers is that large global hotel companies, which have been growing in size due to an increasing number of conversions since March 2020, will seek more to absorb their business.
Speaking at a discussion in the House of Lords in Parliament hosted by the Travel Technology Initiative, Baroness Ros Altmann – who sits in the House of Lords and is a former pensions minister – said the government is committed to ensure that UK regional destinations retain some of the tourism advantages they have recently acquired. She added that it is as part of the government’s “race to the top”” Politics.
Sally-Ann Hart, MP for Hastings & Rye, said the hotel and hospitality industry employs many people in her East Sussex constituency which borders the English Channel and inland, natural wonders such as the Weald and the South Downs.
Hart said she did not want to see coastal hotel performance decline even as performance in the London hotel market recovered.
“Our members are always pressuring us to added value [sales] taxes reset to their lowest Rate of COVID-19,” she said, referring to the reduced pandemic-era rate of 12.5% that has returned to its usual level of 20%.
“In terms of domestic travel, the pandemic has had real benefits. Am I allowed to say that? I see more and more people taking a week’s holiday abroad, but also a week here in the UK, and in Hastings we have the history,” she said.
Hastings is revered as the site of early modern British history, where the Norman invasion of England took place in 1066, marking the start of monarchy.
Hart called for more funding for destination marketing and management organizations, increased stakeholder integration and broadband improvements in rural and coastal destinations.
“We have to sell our destinations, but not in a small way. You have to pull yourself together,” she said.
Thomas Magnuson, co-founder and CEO of Magnuson Hotels, said politicians’ wish lists come at a time when the UK hospitality sector is at a critical juncture, which he said could lead to a “complete restructuring of travel global business, which is down both domestically and internationally…between 60% and 88%.”
“It took seven years for the industry to recover after 9/11 and another seven years after the Great Financial Crisis,” Magnuson said.
Corporate travel and independent hotels are both in precarious positions, Magnuson said.
“In the past, business travel was a segment that was only expected, part of the fabric, but now most companies are forced to have zero-based travel budgets, with all travel offered requiring proof of return on investment,” he said.
“Business travel will be driven by what is essential, which includes key workers and supply chain segments such as transport, security, technology, energy, industry, government and construction, meaning people who have to travel to do their job,” he added. .
Of the 45,000 hotels in the UK, 72% have fewer than 50 rooms, and Magnuson predicted that independent hotels will fall to 22% of the UK total by 2026, when it was the global chains that had that percentage in 2010.
“Businesses have been forced to borrow more money to survive government-mandated hotel closures, adding debt to already strained operations,” he said.
Magnuson proposed a national business registration process, including Airbnb properties, and impact studies when new hotels are offered.
“Other, [the U.K. hotel industry is] in danger of being homogenized and given,” he said.
With hiring and retention of staff weighing heavily on the minds of hoteliers, the industry has an opportunity to make employment in the sector fairer, better and more attractive, speakers said.
Hart said she was keen to advocate for teenagers to learn people skills through weekend jobs in hotels and hospitality, and she backed a private member’s tipping bill from colleague Dean Russell. , MP for Watford.
The “Tips Bill” is listed as banned “employers withholding tips and gratuities intended for staff; provide for the distribution of tips and gratuities among staff members; and for related purposes.
The bill is due back in parliament for further discussion on September 10.
Panelists said consumers are feeling rapidly rising energy and food and beverage costs, which are hurting hotels.
Joss Croft, CEO of UKinbound, said the UK had fallen further behind other European markets in its recovery from COVID-19.
“Visitors have gone back to worrying about economic worries, not health worries,” Croft said.
He mentioned the Lake District, one of the UK’s most popular national parks, and said potential visitors to neighboring cities of Liverpool and Manchester said they would not come until the prices for the fuel would not be as high as they are now.
“They also bring their lunches with them, and don’t spend in restaurants and cafes,” he said. “And the government has decided with everything that’s going on, now is the perfect time to increase the cost of a visa. VAT is higher in the UK than in every other European country except the Denmark.”
Hart said the June 21-24 railroad and subway strikes would compound the problem.
“The 2017 rail strikes resulted in 30% less traffic at Hastings & Rye,” she said.
There were 21.2 million visitors to the UK in February 2022, Croft said, which was 53% of 2019 visitors over the same period, and spending per visitor is up from 2019.
“American visitors to England now represent 33% of the total, the same percentage as in 2019, and they represent as many numbers as the second and third largest inbound markets combined. … the Chinese won’t be back until the second half of 2023,” he added.
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