Latest Brexit stumbles add to UK hoteliers’ uncertainty
Latest Brexit stumbles add to UK hoteliers’ uncertainty
14 MARCH 2019 8:33 AM

Hoteliers must cope with unanswered questions and worries around labor and investment as the U.K. government continues to stumble to the finish line of the country’s planned exit from the European Union.

LONDON—As the United Kingdom draws closer to the 29 March deadline to leave the European Union with still no deal in place, hoteliers are left to mull over the uncertainty that creates and worry over the labor shortfalls Brexit could spur, sources said.

In a Parliamentary vote on 13 March, MPs voted against a “no-deal” Brexit, in which the U.K. could leave the EU without a signed agreement, a route that many believe would end in an economic slump in the country.

U.K. law still states the U.K. will leave the EU on 29 March, but there is talk about an extension of three months or even two years.

The next step might be a passed Parliamentary vote that requests an extension timetable for Brexit, but that request needs to be agreed by every member of the EU, which could be a difficult hurdle with EU elections taking place in May.

As hoteliers and business advisors are quick to point out, confusion remains the winner.

Russell Kett, chairman, HVS London, the Brexit saga shifts and changes so quickly that the collective understanding of the situation seems to change on a day-to-day basis. That is less than ideal for the hotel industry.

“Uncertainty breeds indecision, and indecision puts off important decisions that (investors) feel could be adversely affected as a result of what is the final conclusion of Brexit,” Kett said.

He noted the longer the situation lingers, the more trickle down there will be for hoteliers.

“With small things, fine, as with certain investments, but for other investments there will be some delay and for others investors will procrastinate just as the government is doing,” Kett said.

Jonathan Raggett, managing director, Red Carnation Hotels, said hotel business is very strong in London, but the main issue he had continued to be over labor.

“There is uncertainty with the huge number of European staff who work for Red Carnation. These (employees) are the guts of the fabric of everything we do,” Raggett said.

“And I am not talking just about the cheaper end of labor. This is not a case of British passports holders doing the job if we pay them more. I have not received an application form for a housekeeping position from a British person in two years,” Raggett added.

This is the one worry for hoteliers permeating all of the Brexit discussion.

Speaking after an earlier vote, James Chappell, global business director, at business advisory Horwath HTL, agreed that the biggest risk to the industry is on the staffing side.

“Who is actually going to be working in our hotels, and how difficult is it going to be to get them here? Shamefully little has been spoken about this, and it’s a huge concern,” Chappell said.

Do not think this is just a concern for the U.K., he said.

“I know that this is a big topic on hotels in Europe as well, and they don’t have the issues we are going to have,” Chappell added.

Raggett said the continuing indecision might also be stopping people wanting to come to this country to get experience from doing so. Also, the slide of the pound sterling—it did rally a little on yesterday’s vote—means that wages in real terms are dipping, thus resulting in many mainland European employees choosing to return home.

“This also is not just about London. We have a hotel in Dorset, and it is the same thing,” Raggett said.

He believes that while some professions such as nurses and medical staff might be permitted special status to move and live in the U.K., he doubts the same considerations would be given to hotels and hospitality staff.

“We have lost very few staff, but I have spent much time in the last year reassuring them,” Raggett said.

Hoteliers sure, MPs not so
The general assumption among hoteliers, indeed, the U.K. public, is that MPs do not fully understand the implications of Brexit.

“If the management of one of the hotel companies we all follow does not reach a natural conclusion on a business matter central to its development, shareholders would voice concerns and heads would roll,” HVS’s Kett said.

Ultimately, Kett said the execution of the entire Brexit process—which started with voters electing to leave the EU in the referendum of June 2016—has been insufficient.

“To get it right, you have to start it right. One could say (Prime Minister Theresa May) was ill advised. She cannot possibly know everything herself,” Kett said.

Raggett and Kett said the next step might be an extension to Brexit negotiations of three months or even two years, timespans likely to fuel more indecision for hoteliers.

“(The U.K. government) might ask for more time to get all the ducks in a row. If they cannot do that deal, we could still crash out with no deal, which some (MPs) think remains the right thing to do, but whatever is agreed must be acceptable to the EU and will come with conditions and financial considerations,” Kett added.

He said Brexit, in the end, could just be a black eye for the country.

“If U.K. voters get to vote in European Elections, then is that all the money (spent on Brexit in the last three or four years) down the toilet? It will be a farce, and an expensive one,” Kett said.

Kate Nicholls, CEO of UKHospitality, the U.K.’s principal lobbying association for the hotel industry, said one problem is that the only decisions made are on what politicians do not like.

“The uncertainties of the past two and a half years have generated considerable instability. It is borderline ridiculous that we are just over two weeks away from Brexit and still don’t really know what we are facing. In recent weeks, Parliament has shown consensus on what Parliament does not want, and very little on what it does,” Nicholls said.

“The vote to take ‘No Deal’ off the table provides little real confidence as Parliament still cannot settle on a deal. A ‘No Deal’ Brexit would cause serious problems for many in the hospitality sector. If Parliament is serious about avoiding it, it needs to act now to ensure it does so, whether through a deal or by securing an extension to Article 50. Even an extension may bring further uncertainty if there is no clear signal that a deal can be secured,” she added.

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