UK Hospitality Trends: What to Expect in 2024

Despite the challenges that the UK hospitality industry continues to face, owners, operators, and investors have many reasons to look forward with great optimism.  

While we specialise in people strategy and recruitment, Hospitality People Group is committed to continuously exploring the full hospitality landscape to identify trends and insights to support our clients in finding the best solutions for their businesses.  

Here are some of the key themes that we foresee will impact the hospitality sector in 2024. 

Hotel Investment
Investment trends in the hospitality sector are a valuable longer-term indicator of expected performance, and confidence in the UK market is booming. The rapidly increasing hotel supply in London, but also Edinburgh, Glasgow and Manchester, is being driven by both domestic and international demand. According to a recent report by Deloitte, London is expected to become the most attractive European city for hotel investment in 2024, with 11,000 new rooms planned to open.  

Outside of London, Edinburgh has the largest supply of five-star hotels in the UK with over 60 active hotel projects that are due to add around 5,000 rooms to the city’s hotel market. Some notable openings include  W Hotel, Tribute (expected to open in August 2024), and the Hyatt Regency Edinburgh Marina Hotel. 

The increase in supply will put ever-increasing pressure on the recruitment market, so like last year’s Battle for Retention, businesses that manage to retain their valuable employees may be better positioned than those that don’t. 

Travel Numbers
With the latest passenger travel figures from Heathrow, there’s a strong indication that 2024 will mark a significant milestone in the travel industry. For the first time since the pandemic, the total number of passengers passing through Heathrow is projected to surpass the figures recorded in 2019.  

A closer look at the international arrival data also reveals some intriguing trends. Travel from the Middle East and North America has not only recovered but has also exceeded the levels seen in 2019. The Asia/Pacific region is still lagging, with approximately 1.5 million fewer travellers in 2023 compared to 2019, but the majority of this shortfall occurred in the first half of 2023, suggesting that the gap is closing. While there is a disparity across different regions, the trend is positive and offers valuable insights for the hospitality industry as it welcomes more global travellers in 2024. 

Super Luxury Hotels 
The last year has seen a number of high-end luxury hotel openings in London, including The Peninsula and Raffles London at the Old War Office. Next year will see a new Mandarin Oriental and Maybourne’s new, all-suite, The Emory Room. Rates for these hotels all start at £1,000+, and this minimum rate expectation has already become a standard expectation for existing luxury hotels. According to a recent article from the Guardian, there is a new era of exclusivity, and with an expected 18% more visitors to London forecasted to spend 25% more than last year, there is an expectation that these higher rates will continue to attract those who can afford them. 

With these increasing rates and guest expectations, there will be skyrocketing costs and often unpredictable increases. At the highest luxury level, these costs can be far more easily passed onto guests, but guests at anything less than ultra-luxury hotels are likely to be a little more price-sensitive.  

Inflation and Rising Costs
The UK hospitality industry continues to face challenges due to inflation and rising costs. The 9.8% minimum wage increase to £11.44, which comes into effect in April 2024, will put pressure on the wage structure at all levels in hospitality. Many businesses may have to raise their prices again to cope with the increased costs. Some may consider reducing employee hours, but given the demand for talent, this could be a risky solution. Inflation, which is expected to remain above 3% by the end of 2024, has also increased the costs of raw materials and energy. Energy costs, in particular, have soared by more than 50% since 2021, making it difficult for hospitality businesses to operate profitably and sustainably.  

Just as strong financial leadership was so crucial during the pandemic, the direction now needed to ensure that the increasing revenues expected in 2024 translate into increased profit, will be essential. 

Hospitality Recruitment
The hospitality sector has been struggling to fill vacancies for some time, but the situation has been exacerbated by shifting demographics, the pandemic, and Brexit. With nearly half a million less 18 year olds than 10 years ago, the combination of the pandemic and Brexit has made it much more difficult to replace these potential employees, while skills shortages have made it harder to find qualified employees for specialised roles.  

Unfortunately, the recent announcement regarding the increased threshold for minimum salary needed to get a skilled worker visa is likely to increase pressure on this shortage. According to Kate Nicholls, UKHospitality’s Chief Executive, “There were 8,500 hospitality visas issued last year, which helped bring in talented chefs and managers of the future. Around 95% of those would no longer be eligible under these plans (an increase from £26,200 to £38,700), despite being offered competitive salaries.” 

Once again, the Battle for Retention is an increasingly important strategy for all hospitality businesses as they try to minimise employee turnover with a strong workplace culture.  

We hope this article will provide you with some insights and inspiration for 2024. 

If you are looking for a partner to support your people strategy in 2024, then please get in touch. 

Dan Akhtar, Managing Director – HPG Advisory Services
+44 208 600 1166 / +44 7808 157796
dan@hpgsearch.com 

Chris Denison Smith, Managing Director – FM Recruitment
+44 20 8600 1160 / +44 7775 711923
chrisdenisonsmith@fmrecruitment.co.uk  

Guy Lean, Managing Director – Madison Mayfair
+44 20 8 600 1180 / +44 7813 009787
guylean@madisonmayfair.com 

Andrea Shaw, Director – FM Recruitment
+44 20 8 600 1160 / +44 7714 236469
andreashaw@fmrecruitment.co.uk

Insights from The Resort & Residential Hospitality Forum 2023

With the Resort & Residential (R & R) Hospitality Forum recently taking place in Lisbon, we delve into some of the key insights to uncover opportunities in leisure hospitality investment in the Mediterranean and Southern Europe.

This event is run by Questex, the same team behind the International Hotel Investment Forum (IHIF), which Dan and Mara attended in May, and the Annual Hotel Conference (AHC), which was attended by our colleague, Guy Lean, in September.  

Here is a brief summary and some ke takeaways from The Resort & Residential Hospitality Forum 

Attendance and Demographics
The forum saw a total of 390 delegates, with an impressive 58% being first-timers. Significantly, 98 of them, which is over 25% of the total count, were investors, proving that leisure hospitality continues to draw attention from varied capital sources. 

Theme: Leisure to the Core
This conference has now evolved from its traditional emphasis on beach resorts. It includes a wide variety of leisure offerings like wellness retreats, Alpine resorts and hotels which used to be more corporate-centric but are now welcoming leisure guests. This shift also indicates a new wave of investors who perceive these assets not as fleeting opportunities, but as long-term investments. 

The Market’s Perception of Leisure Hospitality
One of the most discussed topics was the resilience of the leisure hospitality sector. Despite the numerous challenges thrown at the travel industry in recent times, including wildfires, air traffic control strikes, and even the aftermath of COVID-19, the demand for leisure hospitality remains strong.  

This is evidenced by statistics presented by STR, Hotstats, and tourism economic analyses. This steadfast demand, combined with an observed savings glut during the pandemic, suggests there’s ample room for optimistic growth projections. 

Investment Trends
Patrick Whyte, from Hospitality Investor, shed light on emerging investment patterns. He highlighted the contrast between struggling transaction volumes in Northern Europe and flourishing ones in Southern Europe, particularly in countries like Portugal, Spain, and Greece. This is likely because of owner-operators and family businesses seeking exits or joint ventures after facing post-COVID challenges. 

Supply Evolution and Professionalisation
The forum also touched upon the professionalisation of assets. Opportunistic funds, for instance, are keen to understand how to better position an asset to appeal to long-term buyers. A significant part of this involves understanding modern demand, where travellers seek unique and local experiences, rather than traditional resort offerings. 

Climate Change and Extending Seasons
Climate change, which has its set of challenges, is inadvertently offering opportunities by reshaping travel seasons. Investors and hoteliers are capitalising on this by expanding resort seasons, finding profitability in previously off-peak months. 

Branded Residential Growth
The conference highlighted a growing interest in branded residences, with large hotel brands like Marriott and Wyndham leading the way. However, they face competition from luxury non-hospitality brands seeing potential in this market. 

Destinations in Focus
Southern European destinations are garnering the most investor attention. Greece, particularly, stands out due to supportive government policies and market conditions. Additionally, emerging markets like Montenegro, Bosnia, Slovenia, and Albania were discussed as potential growth areas. 

Experiential Elements
Lastly, the forum emphasised the importance of offering a holistic experience to its delegates. From rooftop receptions to hotel tours, participants had the opportunity to truly experience the best of Lisbon’s hospitality. This reflects the increasing trend for more experiential localised experiences that customers are demanding. 

Summary
In conclusion, the R&R 2023 was a comprehensive showcase of trends, challenges, and opportunities in the leisure hospitality sector for the Mediterranean and Southern Europe regions.  

With a broad range of speakers on various topics, it clearly has its finger on the pulse of the industry and the digital debrief offered through multiple videos on the R & R Digital page is an extremely valuable asset.  

Next year’s event is moving to its new home in Athens, tipping its hat to Greece’s growing influence in the hospitality industry. 

If you would like to read more about our personal experiences at International Hotel Investment Forum, Annual Hotel Conference or Future Hospitality Summit this year, then please click on the links.  

If you would like to discuss any of the topics shared in this article or would like to speak to us about your people strategy and our advisory services, then please get in touch. 

Dan Akhtar, Managing Director of HPG Advisory Services +44 20 8600 1166 / +44 7808 157796 / dan@hpgsearch.com

The Evolving Role and Importance of the Hotel Asset Manager

In the dynamic and ever-changing hospitality industry, the role of the Hotel Asset Manager has become increasingly more visible and vital to the investor, owner and operator relationship.   

For some time, HPG Advisory Services has been familiar with the position, as hotel owners and investors build an independent connection to the day-to-day operations of their properties, while savvy operators prove their commercial acumen by adding this additional skill to their property management arsenal.  

Historically, owners would have liaised directly with hotel General Managers and Finance Directors to measure performance. Over the last 20 years, we have seen the emergence of dedicated Hotel Asset Managers who play a crucial role in maximising profitability, ensuring operational efficiency, enhancing the overall guest experience and ultimately, maximising the return on investment. In an interview with Hotelier Middle East last year, Hospitality Asset Managers Association’s Vice President Amit Nayak said that owners have realised that “you need a certain category of individuals to run your asset, those who understand operations; those who understand corporate finance and lending; and those who understand relationships.” 

Here, we explore the ever-evolving responsibilities and significance of hotel asset managers in the hotel industry. 

Financial Performance and Revenue Optimisation

One of the primary responsibilities of a hotel asset manager is to drive financial performance and revenue optimisation. With a highly competitive market, rising costs, and fluctuating demand, it has become crucial to engage experts who can analyse data, identify new revenue opportunities, and implement strategies to protect profits. Hotel asset managers work closely with hotel owners, management teams, and other stakeholders to develop comprehensive financial plans, set performance benchmarks, and monitor key performance indicators (KPIs). They provide valuable insights on pricing, revenue management, cost control, and expense reduction to achieve sustainable financial growth. 

Risk Management and Investment Strategy 

As the hospitality industry faces various risks and uncertainties, effective risk management and investment strategy have become paramount. Hotel asset managers are responsible for evaluating potential risks, assessing market conditions, and implementing risk mitigation measures. They play a pivotal role in determining the investment strategy, analysing market trends, conducting feasibility studies, and assessing the viability of expansion projects or acquisitions. By carefully managing risks and making informed investment decisions, hotel asset managers protect the interests of owners and investors while maximising returns. 

Operational Efficiency and Quality Assurance 

In an era where guest expectations are continuously evolving, operational efficiency, quality assurance and a clear focus on the customer experience are essential for maintaining a competitive edge. Hotel asset managers collaborate with operational teams to streamline processes, enhance productivity, and improve service quality. They implement industry best practices, conduct regular operational audits, and identify areas for improvement. By analysing guest feedback, monitoring online reviews, and benchmarking performance against competitors, hotel asset managers ensure that the hotel maintains high standards of service delivery and guest satisfaction. 

Asset Enhancement and Capital Expenditure 

Hotels require ongoing capital investments and asset enhancements to stay relevant and attractive to guests. Hotel asset managers develop long-term asset enhancement plans, aligning them with the overall business strategy. They identify areas where renovations, technology upgrades, or repositioning efforts can add value and increase profitability. By closely monitoring industry trends and guest preferences, hotel asset managers play a crucial role in guiding capital expenditure decisions that optimise returns and enhance the guest experience. 

Relationship Management and Brand Alignment 

Building and nurturing strong relationships with stakeholders, including hotel owners, operators, brands, and third-party vendors, is a critical aspect of the hotel asset manager’s role. They act as a liaison between owners and operators, ensuring alignment of goals, contractual compliance, and effective communication. Furthermore, they work closely with brand representatives to ensure brand standards are met and brand values are upheld. By fostering collaborative relationships, hotel asset managers create an environment of trust and transparency that leads to successful long-term partnerships. 

Conclusion 

The hotel asset manager role has become a multifaceted and indispensable position for many hotel operators, owners and investors. Their expertise in financial management, risk assessment, operational efficiency, and relationship management contributes significantly to the success and sustainability of hotels in a competitive market. The ability to adapt to evolving industry trends, leverage data-driven insights, and make strategic decisions is essential for maximising profitability, enhancing guest experiences, and ensuring long-term success in an uncertain landscape. 

HPG Advisory Services are specialists in the hospitality Investor, Owner and Operator landscape.  If you would like to have a deeper conversation about asset management, or any of the other services we can offer, then please reach out to set up a call. 

Dan Akhtar, Managing Director of HPG Advisory Services +44 20 8600 1166 / +44 7808 157796 / dan@hpgsearch.com 

 

 

 

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