Posted: 22 Jun, 2021
On 17th June, Part 4 of our webinar series with Colliers saw a panel of experts discuss the reopening of the hotels and hospitality industry. Taking place one year after our first webinar with Colliers, “Hotels & Hospitality: The Road Out Of Lockdown”, this interesting panel discussion explored key developments in the industry over the last 12 months and how different sub-sectors of the market are recovering.
We thank Nick Hammond, Head of Advisory & Restructuring at Colliers, for moderating the webinar which was joined by over 200 listeners, many of whom participated by submitting questions for the panel. The full recording can be accessed here
- Nicholas Northam – Executive Vice President-International, Interstate Hotels & Resorts
- Julian Troup – Head of Hotels, UK, Colliers
- Ben Godon – Head of Hospitality Asset Management, Colliers
- Ross Kirton – Head of UK Leisure Agency, Colliers
- Peter Stevens – Senior Advisor, SME Capital & Former TMA UK President
Opening the webinar, Nick started on a positive note saying that the last year has shown just how innovative and entrepreneurial hotel and leisure operators are. In last year’s webinar, the panellists spoke about the importance of hotels making sure their hibernation period was as efficient as possible and many seem to have achieved this. Ben Godon said that we have seen a ‘recalibration’ across all hotel types and today, most hotels are managing their cost base and expenses much better than they would have done a few years ago.
When asked what it will take for hotels to return to making a profit, Nicholas Northam said that while great sales and marketing will continue to play an important role in a hotels’ success, embracing digital is going to be critical, as will recruiting and retaining key labour resources. Commenting on the performance of different market subsectors, Nicholas said “there’s no doubt that city centre hotels have been affected much worse than rural hotels”. Leisure is currently driving demand as it will continue to do throughout the summer. Hotels catering to the business market continue to see low occupancy levels but Nicholas said that at Interstate Hotels & Resorts they responded to this by temporarily converting a number of their hotel meeting spaces into courtrooms, meeting demand arising from a backlog in the legal system.
Speaking about transactions, Julian Troup said that staycation hotels have never been busier and that many are on track to have a record year. Colliers’ Hotels Agency team has seen sales ‘flying’ in prime staycation areas such as the Lake District and Cotswolds and values are holding up well in such areas. Julian noted that there has been a significant shift in the way in which investors are looking at hotels, with a greater focus being placed upon potential future revenue rather than past performance. Ben added that hotels with multiple revenue streams, particularly those with compelling food and spa offerings, are attracting more attention from investors.
Ross Kirton said: “There are a lot of private equity firms that have managed to pick up restaurant groups cheaply during the pandemic. We’ve also had a number of IPOs and share placings with more to follow; so we are now seeing stock market money keen to invest in the sector showing confidence in its long term outlook.”
Moving on to discuss lending appetite, Nick asked Peter Stevens if lenders are likely to want to provide ongoing support to the hotels and hospitality industry. Peter’s answer was that while the commercial banks might be slow to do so, for those businesses with a good track record and the ability to produce accurate cash flow forecasts there will be lenders willing to lend. Peter said it is important that hotel and hospitality operators work to stabilise their businesses. “The turnaround industry encourages businesses to look to stabilise their operations to see them through these tough times, by reducing costs as much as you can, and then weathering the storm until times are better. Patience is probably the inevitable and only option,” he said.
Touching on a topic that’s seen extensive news coverage in recently weeks, Nick then asked the panel what they think has been causing the current labour shortage and what impact it is having on the industry. Nicholas said that at Interstate, they are actually seeing bigger recruitment challenges in the supply chain. Interstate is experiencing service delays due to their food and drink suppliers and laundry suppliers struggling to hire back employees who went to work for companies like Amazon and Tesco when they were laid off last year.
Finally, looking to projections for recovery, Nicholas said he thinks many hotels will see a strong summer but that the real test will come in Autumn when we will start to see if corporate business and international travel will return. Nicholas said he thinks the industry will begin to see good recovery throughout 2022 and if hotels can keep their costs streamlined many will see a return to profitability. Agreeing with Nicholas, Julian said he thinks the staycation trade will be good for the remainder of the year but that corporate travel will return more slowly. Ben doesn’t think we’ll see a return to 2019 levels of profitability until 2023 or 2024.
Thank you to all the speakers for their time and to everyone who joined the webinar. For more TMA UK events and webinars, visit the Events page on our website.
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