UK hoteliers brace for change as Brexit gears turn
 
UK hoteliers brace for change as Brexit gears turn
18 JANUARY 2017 9:14 AM

As United Kingdom Prime Minister Theresa May revealed her Brexit plan, British hoteliers met for the first big conference of 2017 amid concerns of hiring, retention and supply cost increases as the country begins to leave the European Union.

LONDON—British hoteliers met at the 24th Annual Hotel General Managers’ Conference this week as United Kingdom Prime Minister Theresa May unveiled her government’s approach to Brexit negotiations with the European Union.

Against this backdrop, conference panelists discussed the challenges from Brexit facing the U.K. hotel industry, most notably the increased cost of supplies, including food and beverage, and the problems concerning hiring and retention of staff.

Ufi Ibrahim, CEO of the British Hospitality Association, said worries of an approaching storm have been wildly overestimated, and that despite a weaker pound since the 23 June Brexit referendum, the U.K. has not seen a mass boom in tourism. However, she said that spending by British travelers abroad has increased by 10% since the summer.

Ibrahim also said 2017 could be the year U.K. staycations and inbound visitor numbers outpace 2016’s numbers because Brits had already booked their 2016 vacations by the time of the referendum.

“(The U.K.) cannot rely on currency fluctuations to drive the tourism industry,” Ibrahim said.

Ibrahim said the BHA’s concern is if the U.K. government would engage in any rhetoric around the exit of the U.K. from the EU that would damage the country’s hotel and hospitality product. Ibrahim added the hotel industry could be affected by the government’s “absolute focus on Brexit.”

Olga Polizzi, deputy chairman and director of design at Rocco Forte Hotels, said in the shadow of such uncertainty hoteliers should not take their operational success of recent years for granted.

“Now more than ever it is more difficult to keep customers and more difficult to keep staff,” Polizzi said.

The British government’s exact plans and negotiation strategy won’t be unveiled until Article 50 of the Lisbon Treaty—a step that announces a country’s definite intention to exit the EU—is invoked in March.

“(The U.K.) will continue to attract the brightest and the best to work or study in Britain,” May said Tuesday. “Indeed, openness to international talent must remain one of this country’s most distinctive assets—but that process must be managed properly so that our immigration system serves the national interest.”

Substantial threat
Ibrahim added Brexit was “quite a substantial threat” to the national hotel industry,” which she said existed “at the very sharpest edge of customer service, with unsociable and weekend hours.”

Compensation is not the issue, Ibrahim said, citing that the U.K.’s National Living Wage—which is due to be fully enacted on 1 April—“will lift wages substantially, but more needs to be done to make hospitality into a career.”

Ibrahim said the government is intent on bringing immigration into the U.K. down from the hundreds of thousands to the tens of thousands. Along with rising supply costs due to the weaker pound sterling, that would put pressure on U.K. hoteliers looking to keep service levels high and at the top of their offerings.

“The government does not understand that profit margins on our (profit and loss accounts) are very tight,” Ibrahim said.

A total of 96% of the 700,000 foreign, EU employees in the U.K. hospitality industry would not fulfill the current employment criteria for non-EU nationals, Ibrahim added.

British hoteliers must still invest in their employees, sources said, regardless of where they are from and without trying to second-guess what the repercussions of Brexit might be.

“The answer to the question ‘What if we invest in someone and they leave?’ will always be ‘What if we do not invest in someone, and they stay?’” said Peter Hancock, CEO of Pride of Britain Hotels.

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