As the United Kingdom prepared to reopen its hospitality industry, AETHOS sought to get a clearer picture of the sentiment amongst branded as well as independent hotel operators. The idea was to contrast the mood of the British hospitality industry with that of a country where hoteliers have already had a little head start due to the earlier lifting of restrictions.
Two steps forward, one step back
Unsurprisingly, with U.K. hospitality businesses still in lockdown at the time of writing, operators felt little sense of control of the situation at hand. Unclear policies and regulations, and questions around the timing of the reopening of the industry, severely dampened business leaders’ mood.
In contrast, in Germany, where many hotels had already reopened during the month of May, the first few weeks of operations seem to have heightened executives’ sense of control. They have been able to test safety rules and measures, and staff and guests alike have slowly gotten familiar with the mitigating factors.
The group was re-approached after 23 June, the day on which the British government set a clear date for the industry to reopen and on which the mood in the U.K. significantly improved.
German hoteliers had become slightly more jittery, having learned a couple of days earlier of a resurgence in cases and renewed lockdowns. This is evidence that the situation remains rather fluid and fragile.
Comments from the survey group include numerous references to the many uncertainties that remain. For example, hoteliers from both countries lamented that business on the books remains very low. With most large-scale events postponed or canceled, and many of the demand driving attractions being shut (such as most theatre and entertainment businesses), preparing for the next few months remains difficult.
Although daunted by the huge task of reopening, U.K. hoteliers seemed relieved to be able to get going with at least some sense of renewed optimism. Many commented on the expected high levels of pent-up demand and a summer defined by staycations.
The easing of travel restrictions and the suggested air bridges or tourism bubbles between countries with comparatively low infection rates are expected to further bolster demand.
The news that one of the well-known U.K. hotel brands (Travelodge) managed to secure temporary rent payment cuts through December 2021, and that the government would extend the moratorium on lease forfeitures, also played a role in British hoteliers’ sense of relief.
In contrast, German hoteliers’ optimism appears to have slightly muted in the recent past. Although business had picked up (with resort hotels in particular reporting solid demand), the excitement of re-opening seems to have given way to the stresses of managing operations in a difficult environment defined by profit-limiting performance plateaus and unpredictable booking patterns. However, participants commented positively, for example, on the support received through reductions in VAT on lodging, food and drink (something their U.K. counterparts are also hoping for) as well as the trial air bridge between Germany and Mallorca/Spain.
Going forward, plenty of worries remain which keep hotel executives up at night. It is interesting to observe that as businesses (prepare to) reopen and become accustomed to the new normal, the tactical and more operational issues—although still a worry—are seemingly becoming less of a concern.
Most companies, whether or not they are already up-and-running, appear to have a good, or at least better, handle on managing the mitigating factors, such as training staff on health and safety measures, implementing new procedures for front- and back-of-house staff and enforcing new behaviours of social distancing. The bigger worries, both in the U.K. and Germany, relate to the mid- to long-term strategies around building and stabilising the businesses, such as business plans to reposition operations and attract a different (more local) clientele.
More positively, it is encouraging to observe that, although battered by the crisis and its consequences, hoteliers were able to see silver linings. Keen to rebuild stronger and better, they seem to identify the disruption as a potential vehicle for positive change. The following three themes were amongst the most common:
- A change to drive innovation, best practices and productivity by being required to reskill a large proportion of the workforce, to more closely collaborate, to decentralise decision-making to the front line and to take bigger risks.
- A change to strengthen the company’s talent pool and fast-track potential future leaders of the industry as, with a significantly reduced workforce, most organizations are forced to push employees to more quickly step up and prove themselves;
- A change to reinvigorate the company culture but also to level the playing field by having to draw on a much wider and more diverse talent pool, break down barriers between staff and senior management, and accept greater workplace flexibility.
Thomas Mielke is a Founding Partner at AETHOS Consulting Group and Managing Director of the London office. Contact him at tmielke@aethoscg.com.
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