The UK’s new Labour government has highlighted the importance of hospitality in supporting local communities, high streets and city centres and Prime Minister Keir Starmer’s party has pledged to reform business rates and the apprenticeship levy. Do hospitality investors and operators feel encouraged?
Speaking on a panel entitled ‘Seizing Tomorrow: Turning Political and Economic Shifts into Opportunities for UK Hospitality’ Joanna Kurowska, managing director UK & Ireland, IHG Hotels & Resorts, said that, as a large UK-listed company IHG has already had an audience with a senior advisor Starmer.
“We still haven’t seen anything yet and the proof will be in the pudding. When you hear talk about community, levelling up, whatever way you put it, it is clear hospitality can do so much more than just make money for investors,” she said.
Louisa Green, managing director, RBH Hospitality Management, commented that many hospitality businesses are still suffering from a lack of staff, especially in big cities like London because line-level employees cannot afford to live in these locations.
Although it is often said that hospitality is a resilient industry, Green underlined how acute the labour shortages had been in 2021 and 2022, preventing hotels from fully opening, and that “astonishingly high” energy price spikes had impacted profitability.
Make work pay
As part of its Make Work Pay plan, the new Government has committed to ban zero hours contracts and introduce basic rights from day one to parental leave, sick pay, and protection from unfair dismissal. Nissenbaum said that with 6,000 employees in the UK and around 1,000 on an annual churn, sick pay from day one would have an impact Fattal’s UK business.
The Department for Business and Trade has reportedly said that it has no plans to enforce a four-day working week on businesses, although employees could get the right from day one to work “compressed hours.” Green said such a policy would be of concern for the hospitality industry.
Closer cooperation between the EU and the Starmer government might ease staffing shortages. Nissenbaum said it would be “a blessing if it happens, but I’m not holding up any high hopes.”
As environmental agendas become increasingly critical, Kurowska said hotels are complicated assets to run sustainably: “We are all learning and none of us has all the answers,” but the risk of being saddled with obsolete buildings in the future mean there is no choice but to take action.
She said there was a need to reimagine hospitality in the coming years and to fully understand what it means to run responsible businesses.
AI fills the gaps
Technology is already offering some concrete solutions. Nissenbaum said that Fattal Hotel Group is deploying AI software to perform back-of-house tasks like financial reconciliation because “we couldn’t find the people to do those jobs.” Fattal is also piloting an AI-powered switchboard that automatically relays messages to various departments like the front desk and housekeeping.
Green at RBH Management added that automation has delivered progress for the company in terms of recouping lost commission – something that was previously not getting done – as well as reducing or eliminating queues at reception desks. She added that technology offered the prospect of personalisation and seamless guest journeys.
Kurowska said that she was particularly excited about debuting IHG’s new Garner midscale conversion brand in the UK and Ireland.
Fattal Hotel Group has experienced 25 percent growth over the least two years and Nissenbaum was encouraged by the prospect of further interest rate cuts over the next 18 months.
“Bringing interest rates below four percent will stir more investment, increase deal volume and create more jobs,” he said. Among several hotels due to open across Europe, Fattal is opening two NYX branded hotels in Edinburgh and Dublin this year. With Fattal’s acquisition of The Grand Brighton and The Dilly on London’s Piccadilly, Nissenbaum said the group was expanding into the upper-upscale and luxury segments.