LONDON — Hotels in coastal and rural destinations in the United Kingdom have performed relatively well during the past two summers of high staycation demand, but as the pandemic eases and international travelers trickle back, there is concern any gains will be lost as the industry reverts to normal demand patterns.
Another concern among independent hoteliers is that the large, global hotel firms, growing larger due to an increasing number of conversions since March 2020, will further seek to absorb their business.
Speaking at a discussion at the House of Lords in Parliament hosted by the Travel Technology Initiative, Baroness Ros Altmann — who sits in the House of Lords and is a former minister of pensions — said the government is committed to making sure regional U.K. destinations retain some of the tourism advantages they have recently gained. She added this is part of the government’s “leveling up” policy.
Sally-Ann Hart, member of Parliament serving Hastings & Rye, said the hotel and hospitality sector employs many people in her East Sussex constituency that borders the English Channel and inland, natural wonders such as the Weald and South Downs.
Hart said she does not want to see coastal hotel performance diminishing even as London's hotel market performance rallies back.
“Our members are still lobbying us to have value-added [sales] taxes put back to their lower COVID-19 rate,” she said, referring to the pandemic-era reduced rate of 12.5% that has returned to its regular 20% level.
“In terms of domestic travel, the pandemic had real benefits. Am I allowed to say that? I am seeing more people take a week’s holiday abroad but also a week here in the U.K., and in Hastings we own history,” she said.
Hastings is revered as the site of the beginning of modern British history, where the Norman invasion of England took place in 1066, marking the start of the monarchy.
Hart called for more funding for marketing and destination management organizations, increased integration of stakeholders, and improvements in broadband in rural and coastal destinations.
“We have to sell our destinations, but not in a bitty way. It has to be pulled together,” she said.
Thomas Magnuson, co-founder and CEO of Magnuson Hotels, said the politicians’ wish lists are coming at a time when the U.K. hotel sector is at critical juncture, which he said could result in a “complete restructuring of global business travel, which is down both domestically and internationally ... between 60% and 88%.”
“It took seven years for the industry to recover post-9/11 and another seven years post the Great Financial Crisis,” Magnuson said.
Hard Times
Business travel and independent hotels both are in tenuous positions, Magnuson said.
“In the past, business travel was a segment that was just expected, part of the fabric, but now most businesses are being forced to zero-base travel budgets, with all proposed trips requiring proof of return on investment,” he said.
“Business travel will be driven by what is essential, which includes keyworker and supply-chain segments such as transportation, security, technology, energy, industrials, government and construction — that is, people who must travel to do their work,” he added.
Of the 45,000 hotels in the U.K., 72% have fewer than 50 rooms, and Magnuson predicted that independent hotels will fall to 22% of the U.K. total by 2026, whereas it was the global chains that had that percentage in 2010.
“Businesses have been forced to borrow more money to survive hotel closures mandated by government, which has added debt to already strained operations,” he said.
Magnuson proposed a national business registration process, including Airbnb properties, and impact studies when new hotels are proposed.
“Otherwise, [the U.K. hotel industry is] in danger of being homogenized and given away,” he said.
With hiring and retention of staff weighing heavily on hoteliers’ minds, the industry has an opportunity to make employment in the sector fairer, better and more attractive, speakers said.
Hart said she is keen on advocating for teenagers to learn people skills via weekend jobs in hotels and hospitality, and she has supported a private parliamentary bill on tipping from colleague Dean Russell, MP for Watford.
The “Tips Bill” is listed as prohibiting “employers retaining tips and gratuities intended for staff; to make provision about the division of tips and gratuities between staff; and for connected purposes.”
The bill is due to return to Parliament for more discussion on Sept. 10.
Strains on the Industry
Panelists said consumers are feeling rapidly increasing energy and food and beverage costs, and that's hurting hotels.
Joss Croft, CEO of UKinbound, said the U.K. started from further behind than other European markets in its recovery from COVID-19.
“Visitors have moved back to worrying about economic worries, not health ones,” Croft said.
He mentioned the Lake District, one of the U.K.’s most-popular national parks, and said potential visitors from nearby cities Liverpool and Manchester have said they would not come until gasoline prices are not as high as they are now.
“They are also bringing their lunches with them, not spending in restaurants and cafés,” he said. “And the government has decided with all this going on, now is the perfect time to increase the cost of a visa. VAT is higher in the U.K. than in all other European countries with the exception of Denmark."
Hart said rail and subway strikes from June 21-24 would exacerbate the problem.
“The 2017 rail strikes saw 30% less traffic in Hastings & Rye,” she said.
There were 21.2 million visitors to the U.K. as of February 2022, Croft said, which was 53% of 2019 visitors over the same period, and spending per visitor is up compared to 2019.
“U.S. visitors to England are now 33% of the total, the same percentage they were in 2019, and they make up as many numbers as do the second- and third-largest inbound markets combined. … the Chinese will not be back before the second half of 2023,” he added.