Political and economic uncertainty, working with “frenemies,” the new U.K. government sector deal for the tourism industry and a new review on immigrant minimum salaries dominated the keynote panel at UKHospitality’s summer conference.
LONDON—Uncertainty remains the guiding force in the United Kingdom, as Brexit—the U.K.’s divorce from the European Union—rumbles into its fourth year of dominating the discussion.
The uncertainty has grown following the resignation of the Prime Minister Theresa May and the monthlong contest to be her successor. Whoever wins that battle—either foreign secretary Jeremy Hunt or the man he replaced, Boris Johnson—will adopt the Brexit legislation that May failed to get through Parliament and the impasse with EU officials.
Where this leaves business, specifically the hotel and hospitality industry, was the main subject at the UKHospitality Summer Conference on 25 June. UKHospitality is the principal voice for the U.K. hospitality industry.
Hoteliers on a panel titled “The state we are in” said they continue to focus on the long-term sustainability of their businesses and the resultant opportunities.
“Domestic and international capital continue to focus on the U.K. in its and their long-term strategies,” said Karin Sheppard, managing director for Europe at InterContinental Hotels Group, who added the country needs to solve issues around disparity.
Stephen Cassidy, SVP and managing director for the U.K. and Ireland at Hilton, said two mega-trends—the requirement for experiences and the continued desire to travel—bode well for the country’s hospitality industry.
“We’re lucky,” he said. “Great Britain, as a product, retains its attractiveness. We need to be careful about distractions and shorter-term issues, but in the long term it is a real good story.”
Cassidy said inbound travel due to favorable exchange rates still props up London hotels, driving demand among both business and leisure travelers, but the domestic market feels threatened, which is a real concern for regional markets mostly dependent on weekend bookings.
Sheppard and Cassidy said the U.K. is their respective firms’ third-largest market, and both said that it has only been recently that the market has been relegated to that position by China.
Steve Richards, CEO of vacation-park operator Parkdean Resorts since 22 June, said he definitely sees Brexit boosting the staycation phenomenon, adding that his particular niche of the industry is undersupplied. All Parkdean assets are in the U.K.
People are listening
During the discussion, panelists referred to the upcoming Sector Deal, in which the government will prioritize the tourism and hospitality business as its core industry of focus. That will be especially helpful in efforts to recruit and retain staff, panelists said.
On 24 June, the U.K. government’s Home Secretary Sajid Javid ordered a review into the annual salary threshold for immigrants of £30,000 ($38,073).
A great number of employees in the U.K. hotel industry, many of which have come from the E.U., earn less than this. If those employees could not enter the U.K. to work, British employees would be needed, and British employees seem reluctant to enter the hospitality market, panelists said.
“Take away as much anxiety as you can. Explain to people what is happening even if it is bad news, as people can rock n’ roll with bad news. What they do not like is not knowing anything,” said Debbie Hewitt, independent non-executive chairman at The Restaurant Group.
Hewitt said staff anxiety might be the most difficult aspect of her business to manage. The Restaurant Group employs 16,000 in the U.K., the majority of whom come from outside the U.K.
Cassidy said obtaining the proper recognition for the industry also will help staff retention.
“One of my colleagues, who came here eight years ago from Poland and started on the bottom rung, now is a regional GM with 10 properties. These are the stories we need to tell,” he said.
IHG’s Sheppard said clarity and certainty is also needed in flexible contracts, and the hotel industry must give more help to franchise owners regarding these issues.
Richards said he recently was on a whistle-stop tour of the U.K., which “taught me Britain is not one place and that it is difficult to attract top chefs or people able to manage complex businesses in, say, Pembrokeshire (a region in Wales).”
Sheppard added the talent problem did not start when conversations on Brexit started.
The need for speed
Panelists said uncertainty requires hoteliers to be agile and true to their convictions.
“Are we doing what we need to do quickly enough, that is, before the next change happens? When do you want to be a pioneer, and when does it make more sense to be a follower, at least temporarily?” Sheppard said. “(IHG is) moving away from thinking we need to invent everything ourselves. We can bring things in, too. How do we tap into things, and how can our technological platforms be created accordingly?”
Hewitt said the business model of tomorrow will be far more about collaboration, including working with the industry’s “frenemies.”
Richards said the Sector Deal will help better connect government and business, and business leaders should do all they can to tighten that relationship.
Those leaders need to get closer to guests, too.
“In regards to responsible business, sustainability, customers expect more from us in how we behave, and employees increasingly expect that, too,” Sheppard said.
Cassidy said guests, especially younger ones, also expect there to be an instant solution, preferably a technological one, to every need, but that is what hoteliers should do all the time.
“Over our first 100 years, hospitality has always been at the core, and that will be true of the next 100,” he said. “It’s about being extraordinarily good at what you do.”