Hoteliers voice labor, cost concerns related to Brexit
Hoteliers voice labor, cost concerns related to Brexit
05 MARCH 2018 9:30 AM

Five hotel industry experts spoke about the likely effects of Brexit on hotel staffing. How will the United Kingdom’s separation from the European Union affect how well the U.K. runs its hotels, and can the expected shortfall in labor be made up by homegrown talent?

REPORT FROM THE UNITED KINGDOM—The United Kingdom government’s negotiations over its break from the European Union appear to be going nowhere fast.

The legal future of mainland-European labor in the U.K. is key to any amicable settlement, and the hotel industry will be particularly squeezed by any potential legal change in the ability of European Union citizens to reside and work in the U.K.

Three U.K.-based hoteliers and two consultants weighed in on the issues, and one point is clear: Hoteliers need to continue imploring politicians to consider how much revenue hospitality brings to the U.K. gross domestic product, and how much of that is dependent on the knowledge, skill and enthusiasm of immigrants.

Robin Sheppard,
chairman, Bespoke Hotels
Chris Mumford,
managing director,
AETHOS Consulting Group
Peter Hales,
managing director,
Michels & Taylor
Thomas Dubaere,
COO, U.K. and Ireland, AccorHotels
Martin MacPhail,
director of human resources, Redefine|BDL Hotels

1. How much is the United Kingdom hotel industry dependent on European Union employees, and does the government have an understanding of this dependence, if it does indeed exist? Will some segments of the hotel industry suffer more than others?

Robin Sheppard, chairman, Bespoke Hotels: “The hotel industry is hugely reliant upon Eastern Block employees who have both delighted and embarrassed us with the quality of their work ethic and the reliability of their service. We are already seeing signs of attrition as employees start to return to their homeland because the pound no longer offers so much value when taken back into poorer euro countries. We will continue to feel the pinch from heads of departments down to the most junior members of staff.”

Chris Mumford, managing director, AETHOS Consulting Group: “The U.K. hotel industry is hugely dependent on EU employees with the average 5-star hotel in London, for example, typically having 50 nationalities among their workforce. I do not believe the government is blind to this heavy reliance on foreign labor, and the situation is not unique to the hospitality sector but can also be found, for example, in the (National Health Service) and in farming.

“Furthermore, since the referendum, organizations such as the British Hospitality Association (as of this month UKHospitality) have been lobbying government hard to account for this dependence in their exit negotiations with the EU. EU workers are to be found in all departments of a hotel, so I don’t think any function area will be exempt. The impact will be felt hardest in those areas of high employee headcount such as housekeeping and F&B.”

Peter Hales, managing director, Michels & Taylor: “The degree really depends on micro-economics, region by region and town by town. Michels & Taylor has hotels with fewer international team members, as where they are located has proportionately a greater pool of local talent. Other hotels, especially in London, the dependency is sometimes absolute with no local alternative, so the government really has to take this into account when formulating the Brexit plan.”

Thomas Dubaere, COO, UK and Ireland, AccorHotels: “A British Hospitality Association report last year suggested that up to 24% of the sector’s workforce is made up of EU migrants. That is a substantial proportion, and although the government has confirmed that EU citizens currently living here will be able to gain ‘settled status,’ the industry needs to be able to recruit new people to grow and to replace churn.

“If net immigration falls due to Brexit, then of course this will make recruitment more challenging, more so in London than in the regions. Certainly, some roles have a higher proportion of non-British people in them, chefs being a prime example. The BHA has offered to consult with the government, which is a fantastic step. Government and industry should work together to find the best way forward. We are the fourth-biggest sector, contributing 10% of GDP. I hope that the government looks after the industry, including its workforce, as a matter of national interest both now and in the future.”

Martin MacPhail, director of human resources, Redefine|BDL Hotels: “Around 30% of our total workforce is from mainland Europe. It is harder than ever to recruit within hotels, and not just due to Brexit, but because of perceptions of the hospitality industry. Hotels are absolutely looking at new and better ways to engage with potential employees in the U.K.”

2. What labor-oriented benefits are coming from the whole idea of Brexit? Is it making employers in the U.K. reach out to potential employee sources here in the U.K.?

Sheppard: “No, there is no point. School leavers are too posh to wash.”

Mumford: “Brexit-related challenges are forcing hospitality businesses to broaden their thinking in terms of how to not only source but also how to retain talent. In terms of staffing, through the implementation of flexible working and shift patterns, other demographics are being tapped for staff—for example, as retail has done to some extent—targeting those of pensioner age, working mums, students, et cetera.”

Hales: “I don’t think anything has really changed; finding the right talent has been challenging for some time now. It may just become more challenging, so extra focus and effort is needed.”

Dubaere: “As an industry it is important that we encourage people to see job opportunities in hospitality as a positive career choice. I believe that to achieve this, business must create an exciting work environment, with hard work rewarded well and solid career prospects afforded to those who are dedicated. Basic building blocks like paying the National Living Wage are important, but it is more than simply pay. People can learn new skills, have the opportunity to travel and with the right attitude and ambition can achieve real responsibility at an early age. The hospitality industry is also a fun industry to be a part of, and we don’t focus on that enough.”

3. There are hotel schools in the U.K. Do you get the sense of their worth to the industry, or is it still the case that British people do not look to the hotel industry as providing an adequate career path?

Sheppard: “This is changing, and there are bright, talented British staff coming up through the ranks and occupying positions of influence. We just need more numbers.”

Mumford: “Hotel schools have their place, especially for those looking to pursue a long-term, management-level career in the sector. The issue is that most people going to hotel school are already converts; they have already decided that this is where they want to make a living. The bigger issue is attracting people to the sector in the first place, communicating its attractiveness to those who know nothing about it. This problem of British people disdaining a job, let alone a career, in the service sector is not new. You see the same reluctance among young people in other markets around the world, for example in Japan and Singapore.”

Hales: “I think the hotel schools in the U.K. do a super job. There will always be a certain cachet for Swiss hotel schools due to history, but (U.K. schools) like Surrey, Oxford Brookes and The Edge certainly give them a run for their money. A change in perception is needed. … We are a professional, focused and commercial multibillion business.”

Dubaere: “(The U.K.) offers over 200 courses to teach people the technical skills. However, we are seeing a growing importance in a different sort of skill base. To create a memorable guest experience, we need people who are passionate about hospitality and service. If someone has these attributes, we can teach them the technical aspects of the job. This means we can recruit from a much broader pool of potential employees.”

MacPhail: “As to hotel schools, there is absolutely worth in these institutions, as they are part of this industrywide drive to encourage people to view hospitality as a viable career rather than a stopgap. However, they need the support of the industry to be able to play their part in the bigger picture, and partnerships between hotels and hotel schools are to be encouraged.”

4. In the short term, will U.K. employees fail to bridge the labor gap? Won’t the apprenticeship scheme take some time to develop?

Sheppard: “There is a potential for catastrophe here, and so we have taken action to secure talent from other countries like South Africa and Sri Lanka by investing in work-permit agents to act on our behalf in the hope that we can unlock demand for jobs here from new or rediscovered territories. A lot of businesses will close this year.”

Mumford: “I don’t believe we are headed toward disaster—toward difficult times, yes, but not calamity. I am skeptical that the answer will be U.K. employees filling the gap. Rather, I think that the terms of the finally negotiated EU exit will allow for the employment of EU workers, and we will continue to recruit Spanish receptionists, French chefs de cuisine, German reservationists and Italian waiters. The process for doing so will be more complex and therefore more expensive, in both money and time, but it will be possible.

“Fortunately, I believe that EU workers will still want to come and work in the U.K. despite reports that some no longer feel welcome. For that, thank the fact that our national language is English and that enough young people want to learn and perfect their English skills. In addition, one hopes that at some point the pound will regain sufficient strength for the financial incentive of coming to work in the U.K. to return.”

Hales: “Every initiative to bring talented people into our wonderful industry needs to be supported. We have the benefit that hotels are fantastic places to work.”

Dubaere: “It is potentially our biggest challenge in the next five years. However, with hard work both from the industry and government, the problems are not insurmountable.”

MacPhail: “Alongside encouraging new people into the hospitality industry, we are working hard to retain existing talent and create a viable and attractive career path within the sector. Our recently launched foundation degree management training course, for example, offers young people age 18 years and over the opportunity to earn and learn, working within the hotel industry whilst gaining a recognized, formal qualification from University College, Birmingham. At the other end of the spectrum, we have our well-established Pyramid program designed to fast-track promising members of management through personal mentoring and development.”

5. Is enough being done to argue that the hospitality industry should be exempt from some rules in terms of EU employees providing the necessary passion and language skills, whereas, perhaps, their U.K. counterparts are not interested in doing so?

Sheppard: “I think this is irrelevant, as we don’t have enough time to change hearts and minds, and it will take a generation to turn around.”

Mumford: “The industry and organizations such as the BHA need to keep banging the drum and making their concerns heard. I believe that the combined potential damage that could be done to the hospitality, agriculture, health and other service sectors is such that the U.K. government will seek to negotiate a way to keep the employment border open.”

Hales: “As an industry, we are not a special case. This will be a challenge for a lot of sectors. I cannot think of a case when the hotel industry has been given special treatment, however valid the argument, so we need to get on with it ourselves. Yes, continue to put pressure on the government, supporting the case for all industries that require International labor.”

Dubaere: “The BHA is doing a good job representing the industry on this issue, and it has made some good suggestions to the Brexit secretary such as an expansion of the role of the Migration Advisory Committee and an evidence-based approach to immigration. At the end of the day, the government must look after the national interest. But with the hospitality industry contributing 10% of GDP, it seems clear to me that doing everything it can to protect that industry is very much in the national interest. At the same time, businesses in the sector must look after their own interests, and that means taking responsibility and ensuring they are good employers and offering careers that are as appealing to U.K. citizens as they are to their EU counterparts.”

6. What is you prediction in terms of employment supply in light of demand in the next 18 to 36 months?

Sheppard: “For those members of staff remaining in employment in the sector, I would expect all to receive significant pay rises and see wholesale increases in ‘tapping up’ of employees, and I see a reduction in excess of 15% of our total workforce.”

Mumford: “The bad news (for the hotel sector) is that U.K. unemployment has halved since late 2011. There simply aren’t enough out-of-work people with a desire to work in the hotel world available to fill all the jobs currently held by EU workers. Demand will therefore outstrip supply, which in turn will drive up wages. The question is whether businesses can sustain increased labor costs and how much of that can be passed on to the consumer.”

Hales: “It will continue to be tough. This will differ by location, so it cannot be looked at as a whole. It will need to be worked on at a local level supported by national initiatives. If the hotel is one of the best employers locally it is easier to recruit, however limited the pool (of employees) becomes.”

Dubaere: “Hospitality businesses that are progressive in their approach to recruitment and attract talent to build careers within them are less likely to be affected than those who don’t. But the landscape is likely to be fundamentally different in 36 months’ time.”

MacPhail: “There is so much uncertainty around Brexit at the moment that it is unclear what the impact on our workforce will be. However, we must plan for all ifs, buts and maybes and ensure we are doing what we can to attract and retain talent across the board and showcase hospitality as a vibrant and established career path.”

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