Opportunities and threats for hotels in the post Brexit world

28 September 2016

With the hospitality sector now the fourth largest industry in the UK and, according to the British Hospitality Association (BHA), with the sector creating one in five new jobs since 2010, the UK hospitality industry is thriving.

Within this, the UK hotel sector has performed strongly since the financial crisis of 2008/09 with revenue per available room increasing every year from 2009 to 2015. But it’s not all smooth sailing, with forecasters predicting a downturn in this statistic for 2016. This is arguably a result of the EU referendum in June which has created uncertainty in the business world and with hotels in particular. In this article we look at some of the opportunities and threats to the UK hotel sector post Brexit.

  1. The decline in the value of Sterling will continue to attract overseas visitors to the UK, in particular tourists from The Far East and the USA. This will be good news for occupancy levels, although the threat of terrorism could have a negative impact on hotel stays as we have seen in France. The more favourable exchange rate for overseas investors should also encourage further investment into the UK hotels sector.
  2. The biggest concern for UK hotels will be ensuring that they are able to recruit sufficient staff to operate given the reliance on workers from EU member states and how “freedom of movement” will operate in the future.  Added to this the National Living Wage, which was introduced in April, and the Apprenticeship Levy which is to be introduced in 2017 for larger employers, human resources and staff costs will need to be closely monitored in the months ahead.
  3. Technology is another area where certain hotels are seeing opportunities and advantages. Loyalty programmes based on CRM systems are well established, but these have now taken on a new dimension with the rise of data analytics. It seems obvious that most people would prefer to stay in hotels that know them and their personal preferences compared to those hotels which show no such interest. Data analytics allows hotels to analyse extensive customer data to establish and deliver on customers’ preferences such as a particular room choice to encourage guests to return again and again. A further example of where technology is creating an advantage is with the check-in process, a long-time frustration of the business traveller.  Certain hotels have introduced smartphone apps to enable advance check in and also the receipt of a virtual key through the app.
  4. The major threat to hotels, which was around before Brexit, is from Airbnb and the increasing use of social media which has allowed people to rent out rooms in their house more easily. The threat is more acute at the lower end of the hotel market, as business customers and guests at five-star hotels are likely to continue to require meeting rooms and additional facilities which Airbnb lets are unlikely to offer. However, will enhanced regulation spell doom for Airbnb? Hotels are subject to health and safety standards and other regulations and complain that Airbnb has an unfair advantage in this respect. Certain European cities, including Berlin, have imposed restrictions on Airbnb lettings to protect the traditional hotels market, so it will be interesting to see how this confrontation will resolve itself.

How can we help?

In this fast-moving industry, we understand how difficult it can be to keep abreast of the latest developments, whilst managing the everyday running of your business. As specialist accountants to the hospitality sector we can help you to stay ahead of the game, and work proactively with you to help you achieve success.

If you would like further information on the services we can provide to your hospitality business, please get in touch with our specialist, Martin Jones.