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UK hotels show mixed results in Q2 with subdued trading forecast …

LONDON – Hotel occupancy in London showed its sixth consecutive quarter of year-on-year decline with Brexit poised to subdue the sector further, according to the latest Hotel Bulletin: Q2 2016, published this week by HVS, AlixPartners and AM:PM. Hotel occupancy in the capital, in common with other major European cities, continues to be affected by increased global terrorist activity. London has also seen a decline in the number of US tourists travelling because of the presidential election. The impact has been a 2% decline in London?s RevPAR compared with Q2 2015 and average room rates failing to increase for the second consecutive quarter.

Whilst this is significant in the short term, London is, and will remain, a huge magnet for inbound tourism so the longer term future of the capital?s hotel sector is still positive, even when taking account the new hotels in the pipeline and the potential impact of the Brexit implementation causing economic wobbles,” commented HVS chairman Russell Kett. Across the UK the picture was more varied, although with overall demand sluggish average RevPAR growth only reached 2%.

This is seen as further evidence we may be approaching the top of the property cycle in some locations. Performance of hotels across the 12 UK cities reviewed varied significantly in Q2. Birmingham was top with RevPAR growth of 16%, while hotels in the Roman city of Bath saw RevPAR up 11% year-on-year on the back of a boost in international tourists. In contrast Newcastle recorded another quarter of RevPAR decline, down 4%, as the combined effects of a 10% increase in hotel supply over the past 12 months and strong comparators last year came into play. Aberdeen saw RevPAR decline 24% year-on-year as hotel occupancy continues to suffer from the city’s exposure to the oil and gas industry.

If predictions that oil prices will continue to fall are correct, this will further suppress demand for the city’s hotels.

Performance has always been very location-driven,” commented Kett, “with localised supply and demand issues having an impact on hotels’ operating performance. UK-wide averages tend to hide these fluctuations and even the performance within an individual city can vary quite markedly from hotel to hotel,” he added. Apart from the 575m acquisition of Atlas Hotels by London & Regional, mergers and acquisitions in the sector have also been subdued throughout 2016 due to uncertainties surrounding Brexit, weaker economic growth in China, terrorism in France, Belgium and Turkey, and the US presidential elections. Now the outcome of the referendum is known and Britain gears up to leave Europe, there is cautious optimism that the hotel sector will remain an attractive source of investment for global investors interested in the medium-to long-term growth perspective. However, this is reliant on the UK remaining an investor-friendly market post-Brexit.

The Brexit decision is having the double-impact of weaker sterling and a reduction in anticipated economic growth.

This is both good, and bad, news for the sector in that Britain becomes a cheaper destination for overseas visitors, dampening outgoing UK travel but potentially increasing the F&B costs as some suppliers pass on price rises. Hotel transaction activity is also likely to slow down as investors assess the outlook of future trading but in the longer term we are optimistic the UK will remain an attractive source of investment for global investors,” Kett concluded. Download the Hotel Bulletin: Q2 2016 by clicking here1.

References

  1. ^ here (www.hvs.com)

Reduced fear of redundancy means people taking holiday at levels not seen since 2007

Fewer worries about the prospect of losing their jobs means that the amount of Discount Holidays © holiday British workers are taking has returned to pre-recession levels.

New data from the Office for National Statistics1 shows that in the final quarter of 2015 and first quarter of 2016 a trend established itself with the amount of leave taken equal to or above the level last seen in 2007.

Reduced Fear Of Redundancy Means People Taking <b><i>Discount Holidays ©</i></b> Holiday At Levels Not Seen Since 2007

An analysis of working hours data by ONS economists concluded that the largest and most substantial changes have been in regular leave-taking, which was lower throughout the economic downturn and through much of the recovery, and which only started to recover in 2014.

This suggests that much of the variation in the ratio of actual to usual hours in recent years is due to patterns of regular leave.

While people feel more confident about taking time off, they are still working far longer than their contracted hours. According to the ONS, the average working week stood at 37.2 hours in 2015, but in reality staff continued to labour longer, with time spent at work averaging 42.9 hours.

Reduced Fear Of Redundancy Means People Taking <b><i>Discount Holidays ©</i></b> Holiday At Levels Not Seen Since 2007

The analysts added reduced leave-taking boosted the length of the actual working week during the recovery, but that this effect had all but unwound by the start of 2016, following the re-emergence of pre-downturn levels of leave-taking.

While the causes of this change are difficult to establish, this result is consistent with workers choosing not to take Discount Holidays © holiday during spells of uncertainty through job insecurity or financial necessity. The impact of people not taking their full Discount Holidays © holiday allowances can be staff being less productive despite spending longer in the office, according to Professor Sir Cary Cooper, president of the Chartered Institute of Personnel and Development.

During the downturn there was massive presenteeism people were worried about their jobs so they were arriving early, staying late and not taking holiday, he said.

There was an attitude that Discount Holidays © holiday was for wimps and even when people did take it they were taking their laptops and answering emails on their phones.

That s not good because they were finding problems and not getting the break they needed people are like machines and need a break or they break.

Reduced Fear Of Redundancy Means People Taking <b><i>Discount Holidays ©</i></b> Holiday At Levels Not Seen Since 2007 Exhausted workers fearful of taking a Discount Holidays © holiday are less productive Credit: Alamy

Labour economist John Philpott added: “The return of leave taking to pre-crisis levels is a good news story and consistent with the fall in unemployment to well below pre-crisis levels.

Employers have been finding it harder to fill vacancies in a tight labour market which has reduced the perceived threat that staff taking time off might be replaced by new recruits.

However, both Prof Cooper and Mr Philpott cautioned that the trend could soon end as worries grow over the strength of the UK economy in the wake of the EU referendum, and fears about jobs being at risk rise again.

Brexit uncertainty may well instil a renewed sense of insecurity in the coming months and once again make some workers think twice before taking their full leave entitlement,” Mr Philpott added.

References

  1. ^ New data from the Office for National Statistics (www.ons.gov.uk)

Hotels in Northern Ireland facing new challenges

Hotels In Northern Ireland Facing New Challenges The Merchant Hotel in Belfast

Unlike our summer climate, on a five-year view the hotel sector in Northern Ireland has enjoyed a sustained period of fair weather. According to Department for the Economy statistics, almost 1,250,000 hotel beds were sold in the first five months of 2016 a stellar performance that is 28% higher than the same period in 2011. For Belfast, the phenomenon of not being able to find a hotel room is not new, and it is unsurprising that the city council region still boasts the highest hotel occupancy rates in the province.

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The statistics also indicate that hotels in the regions are also beginning to do better, with the council areas of Derry City and Strabane and Newry, Mourne and Down both reporting occupancy rates that are higher than at any stage over the five-year period. The larger players in the market are continuing to improve, with almost 70% room occupancy on average during the five-month period. It is unsurprising that the confidence in the sector is reflected in the development of new hotel facilities throughout Northern Ireland, with numerous hotel projects either ongoing or due to commence in Belfast before the end of the year.

On closer analysis, however, there are some early warning signs for the industry. Performance in 2016 was weaker than the same period in 2015, the first decline in sales volumes since at least 2011. Although the 3% decrease in the number of beds sold will be in part due to poor weather and strong pre-Brexit sterling exchange rates, the hotel industry in Northern Ireland cannot be immune to the challenges facing the industry across the globe. Hotels worldwide are experiencing a good deal of market pressure, much of it from new sources.

Airbnb and other sharing economy providers are growing in popularity and are claiming a significant share of the growing demand for accommodation, even in Northern Ireland. The Department for the Economy statistics show that in the two years between 2014 and 2016, guesthouses and B&Bs have significantly increased their share of bed nights sold, from 12% to 15%. In addition, more and more guests are booking through online travel agents who take substantial commissions, and when guests do arrive, they expect the same immediacy of service and control they get at home and at work through their smartphones. A recent report from Grant Thornton has identified personalisation as one answer for hotels looking to maintain or grow their market share in this challenging environment.

By meeting guests individual needs, hotels can win greater loyalty. From online check-in, to the app that customises the mini-bar, personalisation can help hotels stand out from the crowd.

Personalise or perish should be the mantra at the heart of hotel companies efforts to build their brands and lay platforms for long term success. The new-build hotels will have an advantage in the early adoption of technology.

The risk for existing hoteliers is that they will struggle to make the necessary inroads to remain relevant to the guests of tomorrow.

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