SYgle>Industry Information>Brexit forces UK hoteliers to nitpick everything

Brexit forces UK hoteliers to nitpick everything

Column: industry Tag: Brexit,UK hoteliers,UK hotel industry Published: 2017-10-24 10:53 Source: Author:

Paul Milsom, of Milsom Hotels & Restaurants, said he is optimistic about the U.K.’s future and his hotels, including The Pier in Harwich, Essex. (Photo: Milsom Hotels & Restaurants)

LONDON—The United Kingdom hotel industry remains nervous and divided over the U.K.’s upcoming divorce with the European Union, known as Brexit.

Uncertainty is rife over the U.K. government’s ability to negotiate a trade deal with the EU, but the process is already having a positive effect on the country’s economy, according to sources. But whether those positive conditions are sustainable is the question on everyone’s minds. Regardless, sources said the hotel industry must manufacture their own futures through professionalism, initiative, ingenuity and teamwork.

At a packed session titled “Oh! What a lovely Brexit” at the Independent Hotel Show, panelists gave their perspective on the U.K. leaving the EU and how it will affect hotels.

The fall in the U.K. pound sterling—or what some view as its return to a healthier level—has produced more incoming travelers, and the country’s hotel industry is sound, panelists said.

“The U.K. has had a good year, but we need to work hard while we are still part of the EU framework,” said Deidre Wells, CEO of UKinbound, chair of The Tourism Alliance and a 20-year civil servant at what now is known as the Department of Digital, Culture, Media & Sport. “We can do deals without … a trade deal. We also have to be more aggressively welcoming, if I can use that phrase. We can have an offensive on new and emerging markets without losing sight of our near European neighbors. What is important is to have no more barriers.”

Robin Sheppard, chairman of Bespoke Hotels—which manages 9,500 guestrooms and 8,000 employees—agreed that the hotel industry needs as few obstacles as possible to thrive in the new U.K.

“Any barriers could become more bothersome for us to go abroad,” Sheppard said.

Paul Milsom, chairman and managing director of East Anglia-based Milsom Hotels & Restaurants—which has four hotels and several restaurants—said any travel restrictions will quickly put an end to the record visitor levels the U.K. has seen in recent months.

“Tourists are at record levels, and the cheaper pound has had a great effect,” Milsom said. “I see no reason why incoming numbers would be any lower, indeed, they will be higher, but we must not have visa restrictions.”

Labor issues will continue to be a source of concern, but they are not insurmountable, Milsom said.

“Turnover is the key in all businesses,” he said. “I am concerned about costs and staffing costs, but in terms of turnover, the future is bright, as long as there is no recession and (Labour Party leader) Jeremy Corbyn does not become Prime Minister. Staycations are here to stay.”

Brexit has even reversed performance trends in the summer months, Sheppard said.

“Business has been extraordinary this year in relation to the weakness of the pound,” he said. “And what has happened to August? August is always weak, but this year it has been excellent. There also has been a lot of foreign capital investing here.”

Staffing at the sharp end

Sheppard mentioned one of his assets, The Chester Grosvenor, at one point had a staff that collectively spoke 49 languages. Milsom said one of his hotels has a similar language mix.

Brexit threatens this diversity, panelists said.

British subjects could step in to fill void, but they do not seem to want to, panelists said, because of a combination of the industry’s unsocial hours, low pay and family pressure to choose other career paths.

“Forty percent of our members’ staff were migrants, and 20% of those have already gone home,” Wells said. “The main issue is uncertainty as to what their long-term futures will be.”

Milsom pointed out that the U.K. and its hotel industry survived before the decision to join the European Economic Community in 1973.

“We used to employ the Swiss until the EU said we couldn’t,” Milsom said.

Milsom added the best thing his family business has done is to get rid of staff accommodation, which he said increased the international hiring pool.

“(That) forces managers to really concentrate on the people they hire,” he said.

Sheppard warned the U.K. industry might become desperate in regards to new hires.

“Lithuanians, Latvians, Polish, they are starting to migrate home,” Sheppard said. “The pound does not go so far, but if you hire from, say, Brazil, you have to be more imaginative. We are so close to stopping opening restaurants.

“You look at (High Street fast-food sandwich and coffee chain) Pret a Manger. Pretty much it has the mood of the country, and everyone there is using English as a second language. That is wonderful, but also depressing.”

One hope is the government-proposed “Barista visa,” which, if enacted, would allow younger employees to work in the hospitality businesses for two years but to have no claim to receive taxpayer-funded benefits.

“Work harder on retention and productivity,” Milsom said. “The challenge is not just Brexit, it is the cost of and hours of labor. Pay is going up due to the National Wage and because of demand and supply. We have to make sure we are a better place to work. Productivity also is the other challenge.”

Reversing the rot

Moderator Peter Hancock, CEO of Pride of Britain Hotels, said rising wages are also an opportunity because they might attract more people to the industry.

Sheppard said he thought the argument that low wages were a hindrance was “piffle,” or nonsense.

“When you start, of course you will be paid less, but the rewards are extraordinary,” he said. “There are chefs who make more money than the (Prime Minister).”

“The challenge is to get that message across to the wider public,” Hancock said.

Milsom, on the other hand, said the the future of both the country and the hotel industry is bright.

“I think in 10 years we will look at Brexit and see it as just one of those blips,” Milsom said. “We are in an era of constant political negativity. What we need is hope.”

But there will be businesses, perhaps even hotel companies, that won’t survive the changes Brexit brings.

“There might be a little bit of a restaurant recession,” Milsom said. “There are always winners and losers in tough times. And the one thing no one is talking about are business rates. It is a scandal how those rates have been calculated for different businesses and segments.”

Panelists said there is a lot of noise and different opinions and speculation about what will come of Brexit, but the best way forward is confidence in your business strategy.

“We will work it out by ourselves,” Sheppard said. “There is a good Brexit and a bad Brexit, and at the moment we are sleepwalking to a bad Brexit. (Secretary of State for Exiting the EU) David Davis … no one has faith in him. We need politicians of a greater intellect.

“We are left in a fear-induced state. If we get the negotiations to work, it could be a good thing, but, my, we need a combine-harvester to get there.”

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