The “Peak of Uncertainty”
Our very own Guy Lean attended the recent Annual Hotel Conference (AHC) and shares some of his observations and insights from the event.
As Hoteliers and Investors prepared to attend the first sessions of the event in Manchester, news of the tax policy backtrack came through from Westminster, shifting the economic goalposts once again.
We are becoming increasingly used to operating in a state of flux and it is no surprise that “adaptability” became a theme throughout the conference. One attendee even suggested that the AHC was taking place at the “Peak of Uncertainty” for the UK.
Annual Hotel Conference in Manchester
The AHC has always been an impressive event and has grown year on year. It is generally considered to be a more intimate version of IHIF in Berlin, but since the UK continues to be the most valuable region in the European investment market, it is one that attracts a lot of interest from investors, owners and hotel executives. It has always been innovative, being one of the first to go paperless and it has evolved to now offer a seamless app experience that gives more control back to the user.
The Economy
As expected, the economy was the most common topic of discussion, but the most fascinating aspect of this was the general positivity that surrounded the event. There was a lot of talk at the beginning of 2022, about just trying to hit 2019 numbers. And actually, many attendees spoke of how they’ve shattered those numbers. 2022 has been a phenomenally positive year. The success could be partly attributed to the huge pent-up demand from customers, who were still catching up on delayed experiences.
Forecast for 2023
Naturally, the ongoing war in Ukraine, rising inflation and interest rates are still keeping hoteliers cautious. As we plan for 2023 and another very uncertain future, there is continued pride in the resilience that has developed and embedded over the past couple of years. This ability to adapt to changing circumstances is no longer merely a tool to survive, but a highly prized asset now being used to drive success. A few of the speakers at AHC suggested that 2023 will be about bringing things back to basics, keeping things simple and doing what they do really well; cutting out waste and mistakes, looking after employees, working hard and ensuring that guests have great experiences time and time again. As a big rugby fan, it is a mantra that reminded me greatly of Paul O’Connell, former captain of the British & Irish Lions, who said “Let’s be the best at everything that requires no talent”.
So how are investors planning for 2023?
As costs continue to increase and the pent-up demand stabilises to normal levels, which business will continue to outperform the market?
Investors are hopeful that energy prices will settle in the second half of 2023 and feel that there are still great opportunities out there, especially in the luxury market. While the economy hospitality sector will be less able to pass inflation costs onto the consumer, luxury hotels have a history of being able to do exactly that and are seen as a safer hedge against inflation.
ESG Investments
The Investor influence is also being strongly felt in terms of ESG. An investment in a building is generally planned for longer-term value, and buildings that exceed current sustainability measures will be better placed to future-proofing their investments. Inevitably, operators are now being forced to prove their eco-credentials, with roadmaps to carbon net zero and green certifications now de rigeur for attracting investment. If they can’t do this, then then they simply won’t get the funding they are looking for. As the competition for corporate clients in 2023 is also likely to rely heavily on eco-friendly commitments, ESG is no longer a can to be kicked down the road. It is here and now, and needs to be treated with care and authenticity if you’re going to progress.
Recruitment
I couldn’t sum up the event without also looking at the current state of recruitment. We’ve all heard about how businesses have struggled to recruit since the pandemic and the phrase “War for Talent” has been used frequently. At AHC, the operators that were most positive about the future tended to be the ones who spoke of strong cultures in the workplace. Being great communicators and focussing on retention has helped them drive employee satisfaction, keep their best talent and consequently helped attract new candidates when needed.
From our experience, there is no doubt that there is a huge pool of talent out there, but they may just be a little more selective about where they will move next and are looking to work with employers that share their values.
If you would like to arrange a chat about your recruitment strategies or to discuss any points raised in this article, then please get in touch on +44 (0)208 600 1182 or +44 (0)7813 009 787 or guylean@madisonmayfair.com
