2018 UK Hotel Market – Bull to Bear?

Malcolm Brock

Managing Director Brovanture

 

“We don’t expect the growth in 2018 to match 2017, even though the outlook is broadly positive for the UK hotels sector.” ‘As good as it gets? UK hotels forecast 2018 Report’,

– PWC

Bull to Bear – a bit strong? – maybe, but it is clear, 2018 is not going to deliver the growth that the hotel market in the UK saw in 2017. As the impact of the weak pound dampens for foreign tourists and really starts to hit the pockets of UK citizens it is predicted that demand will slow. Also, that dreaded subject, Brexit, is still creating uncertainty for business and this will put the squeeze on business travel as organisations reign in discretionary spending. And finally, the growth in the number of rooms available across the UK will make it difficult to maintain occupancy levels at its 2017 high.

KPMG confirms this in their research, ‘Leisure Perspective Report September 2017’ :

“We are also starting to see the impact of the rising costs of holidaying abroad. Both the price of travel and the cost of goods purchased such as food and drink, are increasing as the value of the Pound depreciates against the Euro. As such, operators are reporting an element of bill shock as holidaymakers return home and spend less on leisure activities in September (2017).

As the summer holiday season has drawn to a close, now is the time for the leisure sector to focus on cost efficiency and new ways to attract customers.”

There is much proffered about attracting customers through front office changes, social media, marketing, customer service and the like, in the recommendations on what UK hotels should do to thrive in 2018, but I think that there has been too little focus on the other point that KPMG makes, cost efficiency.

Whilst Hotels should look to drive growth and market share the prudent will also look to keep a cap on spending and ensuring what they do spend has the maximum impact on the business. To do this well they need to have solid plans and to monitor actual results against these plans on a regular basis. In a fickle market they will need to be agile, so they can re-plan quickly and develop multiple scenarios to be able to determine the best, and most profitable way forward.

To be effective this planning work will have to be done at a property level using the ‘on-the-ground’ knowledge of the staff involved and then rolled up to a corporate level so the board can make the right decisions based on sound information. In my experience, for many hotel organisations, there is a problem here due to the technology they use. At the property level very often the tool of choice for planning and budgeting is the spreadsheet, making agility, consistency and consolidation a real problem.

This is a throw back to the days of on-premises only solutions for planning and budgeting where complexity, cost and connectivity precluded the roll out of enterprise planning and budgeting solutions to properties with a wide geographic spread. But today with the widespread availability of cloud solutions this is no longer the case. I won’t produce a long list of cloud benefits here. I am sure you have seen them many times in many places (if you do want them let me know) but I will mention that a number of global hotel chains have taken this approach for 100s of hotels and seen amazing benefits. Smaller hotel groups have the opportunity to do this too with the pricing and implementation economics of planning and budgeting cloud solutions. If you are interested in how this can and has been done please contact us.