The countdown to Brexit is well and truly on, and ‘deal or no deal’ is the hot topic on everyone’s lips – but what exactly should the hotel industry be doing in this period of ‘limbo’? Helder Pereira, CEO of the UK’s leading independent hotel management company, RBH, says it’s a case of keeping calm – and astute – while carrying on.
PwC’s latest hotels forecast for 2019* has highlighted that, while the uncertainty of Brexit has helped inbound tourism, business investment growth has ‘dampened’ as a result of protracted negotiations. It predicts that hotels will grapple with rising wage and operational costs and slowing growth into 2019.
However, Pereira is taking a more upbeat approach – pointing out that, until an outcome of Brexit negotiations is decided, hoteliers must continue to operate their businesses as efficiently and effectively as possible.
He does recognise the uncertainty that has been felt since the result of the UK referendum dictated the country would leave the EU, and the need for the industry to react to the more immediate impact, saying:
There are so many dynamics at play when it comes to Brexit, that it is hard to predict what the future might hold. However, in the here and now, there are certain factors we in the hotel industry must deal with to ensure our businesses continue to flourish through uncertain times.
The declining EU labour market has been most keenly felt by industries like hospitality, with effects on labour overheads which will – no doubt – have a knock-on impact on recruitment and training costs as we move forward.
Many businesses in general are worrying about the future and are trying to mitigate any future impact, either as a result of a poor deal or no deal at all, by cutting back on expenditure like travel and training as well as product launches. There is no denying that this effects certain hotel occupancies. The longer the uncertainty, the more volatile the market.”
Pereira does, however, see the silver linings through the general haze of negativity that the lingering Brexit negotiations have created, adding: “The weakening of the pound as a result of the ‘leave’ vote and subsequent political and economic uncertainty has certainly driven leisure travel throughout 2018 – but this is starting to stabilise. It is still encouraging those based in the UK to holiday at home and continue the ‘staycation’ phenomenon.”
And while the hotel chief holds the opinion that until the Government can offer some clarity on the future, it is difficult to assess the impact any future Brexit impact, he does identify one area in which futureproofing must continue.
Whether we end up in a ‘no deal’ situation or not, we do have to consider that criteria for future immigration and working rights in the UK will change – and it’s highly likely that we’ll experience further outflow of EU nationals as they relocate to areas that offer certainty in working rights. This will put immense pressure on the industry to attract alternative labour, which in turn will result in rising costs – and even a temporary lapse in standards.
One of our major focus areas at RBH has and always will be on excellence in the areas of the business that centre closely on our people, such as candidate attraction, recruitment and retention through training and development. These areas become even more important during times of uncertainty, and it is in these areas of the business we must continue to ensure we are fully prepared for the impact of Brexit and robust enough to guarantee we can deal with any issues around labour.
That’s why we have looked at investing further in our already comprehensive training and development programmes, as well as our offering for apprentices, with a particular focus on labour retention.”
Pereira also recognises that many of the factors at play, including a stressed labour pool, the pressure to identify new revenue streams and sources of income as other businesses cut back on travel and associated expenditure, and the potential increasing cost of imports, will result in cost pressures and tight profit margins across the industry.
However, he is clear that RBH’s expertise in the market will ensure the best outcome for hotel owners and highlights potential opportunities that may materialise as a result of ongoing negotiations in Brussels.
As hotel operators, our priority is utilising our substantial knowledge of the market to sustain profits and maintain and exceed standards for clients and owners. We always keep a close eye on the market so we can prepare for any changes and react quickly to them, and we’re also looking out for alternative revenues as well as working with suppliers to look at how best to hold costs.
We constantly look for opportunities where others may not see them. For instance, if a ‘no deal’ situation looks likely many businesses will need to put in place plans and actions to deal with the ramifications of this, which could mean more meetings, temporary relocations and training, and a general demand for hotel services outside of simply accommodation. We simply have to remain astute to ensure we can grab these opportunities as they arise.”