Whitbread shares rally as group consults on Rationalisation, Structure, Brand, Restaurant Sell-Off, Share Buy-Back, and Staffing.
Dominic Paul CEO told the stock market (sic) “We are making excellent progress with our plans and over the next five years are set to deliver a step change in our performance which will fund significant returns to shareholders. Demonstrating our confidence, we have today announced details of our Five-Year Plan that sets out the scale of our ambition to FY30”
But what of the general Hotel and Hospitality property markets as a whole, as we near the end of 2024? Richard Payne takes a look.
I wrote an article for Elite Business earlier in the year, only 9 weeks in, and it is interesting to contrast and compare my commentary and foresight. Overall, the Hospitality markets continue to adapt and meet consumer preferences and economic conditions while pushing for more innovation and sustainability. Robot vacuums, multi site management, and better supply chain sourcing. This seemed to translate into corporate operators being able to average a national RevPar of around £82, while almost all reported a drop in Food & Bev sales, save Wetherspoons who reported a 5.7% increase and like for like year on year sales up by 7.6%.
Looking at Hotel Property specifically, most of the acquisitions were made in the urban market, with the country hotel and rural estate style operations staying the domain of the private buyer or overseas investor types. As we near the end of 2024, we are witnessing several key trends, many of which I pointed to back in February.
Continued Strong Recovery Post-Pandemic - Many regions have seen a robust rebound in travel demand, particularly in the leisure and urban markets. Business travel is also recovering, though it may not reach pre-pandemic levels in some sectors just yet.
Sustainability Focus - Hotels are increasingly adopting sustainable practices, such as reducing energy consumption and implementing eco-friendly amenities, re-used kitchen oil boiler systems, biofuel and alike, not only to save on costs but to attract environmentally conscious travellers also. Much like the Airlines, they have made even further in-roads to building a tiered room rate offering, like Basic, Standard, Premium, Premium Plus.
Technology Integration - The use of technology in operations such as contactless check-ins, mobile room keys, and enhanced booking platforms continues to rise. This of course improves guest experiences and overall operational efficiency, and you only need to look at the exponential growth in venue systems like ‘Opera’ and ‘IVvy’ to see this huge tech migration.
Staff Shortages at the coal face end - Many hotels are still grappling with staffing challenges, which can impact service levels and operational costs. Efforts are ongoing to attract and retain talent in the hospitality sector, from apprenticeships and chef academy's, to government backing and intervention. That said, the recent budget provided a bitter sweet offering from Rachel Reeves, with the conservation of the business rate relief scheme albeit at 40% rather than 50%, but then a hike in employer National Insurance contributions which may filter back down.
Luxury and Boutique Expansion - There’s a growing demand for unique, bespoke and boutique experiences, although the boost came a little too late for several of our fall through sales like the Hillside Hotel, Isle of Wight, where the post Truss Budget, interest rates and the economy put paid to any buyer appetite in the short term. More recently we have seen a huge growth in the boutique and luxury hotels market, with more distinctive offerings, although this is against a backdrop of a very popular AirBnB sector, which I think is now saturating.
So to 2025 - Economic growth is expected to be slower next year, with remaining tricky household balance sheets slowing up any UK staycation vibe. And for those with big enough purse strings, aside from the weekend trips and main events, their pound will be spent abroad especially in emerging and growing markets such as Egypt. That said, companies like Premier Inn & Travelodge who have a solid foothold with sites in the European markets including Spain and Germany, will fare very well across all guest types. I would expect a gradual upswing in business investment, due to steady inflation and moderate interest rates, and acquisitions will continue at pace. GOP and EBITDA margins could be more difficult to grow year on year perhaps in 2025, with both metrics held back by higher staffing costs. Some Hospitality operators will have already circumnavigated this before the Budget was even announced, and will be better placed. Upper Midscale chains are still expected to maintain the tightest wages bill, with multi-tasking being the master key from the smallest to the largest of operators.
Comments