No-deal Brexit could mean ‘carnage’ for UK hoteliers
No-deal Brexit could mean ‘carnage’ for UK hoteliers
16 JANUARY 2019 9:47 AM

With the proposed deal for the U.K. to leave the European Union losing in Parliament by a record 230 votes and the country heading to a no-deal Brexit, hoteliers are becoming even more resolute in their efforts to secure the best staff and innovate in terms of service, technology and savings.

LONDON—On the day in which United Kingdom Prime Minister Theresa May’s Brexit deal failed to become law in Parliament by a 230-vote defeat—the highest margin in history—members of the hotel and hospitality industry met to discuss their hopes and fears.

That vote might lead to the very real fear of the U.K. exiting the European Union with no formal agreement as to the divorce, a situation referred to as “No Deal.”

At a conference hosted by The Tourism Society and held at Expedia’s London offices, panelists at a session titled “Prospects” said the prospect of a no-deal Brexit is adding to uncertainty for both businesses and employees.

Jonathan Raggett, managing director of Red Carnation Hotels, which has six London hotels in a global portfolio of 17, said his company’s London properties employ 1,000 people, 800 of whom do not hold British passports.

“I see carnage out there unless the government sorts the deal out,” Raggett said. “In the last year I have seen applications from (mainland Europe) fall to almost nothing. Sixty of our outstanding managers have returned home.”

Raggett said the fall in the pound sterling, high living costs in London and the atmosphere of Brexit are all reasons his colleagues have left, and he added that unfortunately has led to rudeness and the erosion of the welcoming environment.

“One of my jobs now is to go to colleges, meet parents,” Raggett said of his efforts to relay to people the satisfaction and prospects of a career in hospitality.

“There is not, as there is in Spain, a professional class of waiter, of hospitality professional,” said panel moderator Michael Portillo, former cabinet minister and Member of Parliament in the U.K. government and a TV presenter known for his programs on train travel. (Portillo’s father was Spanish, and he holds a Spanish as well as British passport.)

Raggett said finding good hotel restaurant staff will be another problem, with the country risking the loss of many employees.

“Food in the U.K. was a laughingstock 30 years ago, and it has improved because of our close links with other European countries and their cuisines,” Raggett said.

Chillier greetings—and the risk of dining poorly—have not seemingly been noticed by inbound visitors, according to data from VisitBritain.

Richard Nicholls, its head of research and forecasting, said U.K. inbound travelers in 2017 totaled 39.2 million—up 4% over 2016—who spent £24.5 billion ($31.48 billion), an increase of 9% year over year.

“Seventy percent of inbound visitors came from (mainland) Europe, although they represented only 47% of spend. … Saudi Arabia represented the highest spend per visitor at £5,342 ($6,864),” Nicholls said.

Nicholls added the numbers for the first two quarters of 2018 show visitor numbers up 7%, spend up 5% and overnights up 8%.

State of the UK
In conjunction with Oxford Economics, VisitBritain predicts a 3% increase in arrivals in 2019 and a 5% increase in leisure travelers, Nicholls said.

Portillo said there’s still work to be done.

“I have always thought there is a lack of joined-up thinking in the U.K. when it comes to tourism,” he said. “For example, everywhere I go to travel on trains, there will always be glass-domed sightseeing carriages, but that is not the case in the U.K., and we do have some very beautiful stretches of railway line.”

Merilee Karr, founder and CEO of home-stay platform UnderTheDoormat, said one aspect that is giving all travelers more certainty is the growing maturity in the hotel and hospitality industries.

“(The home-stay sector), generally described as being disruptive, is starting to mature, and we will see that more the case in 2019, and this professionalism allows consumers to have more certainty,” Karr said.

Christopher Michau, Expedia’s VP of platform services, said another plus for the industry is that travel now is regarded as almost a necessity, and travel remains a force for good.

“People used to cut travel first in uncertain times, but not now,” Michau said.

Nicholls said long-haul travel to the U.K., from such markets as China and the U.S., looks to be good in 2019.

“2020 makes me more nervous,” Nicholls said.

Tech change
Despite his labor concerns, Raggett said he remains positive.

“We will keep our standards. I do not sleep at night so that will happen. I am brutally competitive, I need those 1,000 employees, and I will find them,” he said. “There is a £65 ($83.51) fee for (EU-passport holders to secure settled status in the U.K. following Brexit), and £65,000 ($83,515) is cheap to get the very best.”

The nature of employment might change, even at the high end of the market, Raggett said, who hinted there might be fewer reception staff present even in luxury hotels.

Raggett said less money will be spent in search, with savings reinvested in voice, which he added would increasingly become a more dominant distribution channel.

Nicholls and Michau pointed to the rise in global travel demand as another positive.

“Yes, it is inexorable, at least at least in terms of spend,* but with that sustainability becomes key,” Nicholls said. “Then again, with any new problem there always seem to be a new innovation.”

Panelists suggested the landscape might not have changed dramatically despite the news headlines, with short-term headaches from politicians countered by long-term growth from demand and innovation.

“The exchange rate has lately been around £1.10 ($1.41) to €1 ($1.14), but in 2009 when I was building a house in Spain I remember the rate was £1.09 ($1.40), so it might take a while for the perception of (current tough economic times) to die down,” Portillo said. “Perhaps we will have one more year for Brexit to happen, and then another year before we see a bounce back in travel demand?”

*Correction, 16 January 2019: This story has been updated to correct the wording of a quote.

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