Abundance of former airline crew join hotel and hospitality sector Recruitment and retaining staff has been a huge issue in the Hotel and Hospitality sector since the end of the pandemic. There is the usual summer churn of temporary employees heading off to university, and part time hours needing to be filled in housekeeping or food and beverage, but where one sector falls another benefits. Over the last 3 to 5 years there seems to have been an influx of former airline crew entering the Hotel market.
Not unusual, as they have the best transferable skills to be able to cope with the now higher demands of modern guests, and they certainly make the best staff so keep that in mind when you next recruit.
Assets An appetite has returned for this asset class during 2023 with lenders, commercial mortgage houses, and particularly private investors and or smaller trade buyers, which has kept deal levels steady albeit with the caveat that prices are marginally down. Whilst I don’t see values returning to the 2006 peak, I do envisage an uplift around mid 2024. Interest rates will have abated, operational costs will have even keeled, and appetite for the sector which is seen as a good hedging fund will increase further. That said, plenty of deals are still taking place now, and transaction levels, although down as an average price on completion, stand firm. Churn will always happen so long as your broker or agent is experienced enough to work the market correctly, and look under every stone. Reliance on the ‘money is cheap’ and ‘enquiry levels being automatic’ is now risky as a potential seller; so choose your representative wisely.
General Market Acquisitions remain strong, with the likes of Hong Kong & Shanghai Hotels opening their first ever site in London this year, London & Edinburgh lead the charge as the most acquisitive, alongside some of the pub companies who are seeing growth in the lettings room side of their estate. There has been a growth in boutique and high end room rate hotels, and we have transacted a number of change of use deals whereby former large public houses with lettings rooms have been converted and repurposed to become serviced aparthotels. Although not immune, Hotels have fared better than many other categories in the commercial real estate market for the first 3 quarters of this year.
Revenue Following a well documented tricky period for Hotels and Hospitality, year on year revenue factors have seen reported growth, with ADR up by 20% year to date and unlikely to decrease going forward, and RevPar being assisted by ever increasing occupancy levels. Some commentators suggest that this is all due to growth in the staycation market, and there is some merit in that however, I just feel that we have reached a new norm, sentiment is back, and people are merely behaving like people once again, even against a doom and gloom backdrop they are making sure to prioritise their spend on fun, health and wellbeing, attending weddings and family occasions, visiting friends, alongside a large uptick in new corporate business accounts also.
Operational costs obviously remain the biggest factor, but some chains are positioned better than others with their model and estate management, and these costs are likely to come down rapidly by the second half of 2024 with margins feeling less squeezed.
Conclusion Whether it be the B&B / Guest House market, Hotels, Pub/Restaurants with Letting accommodation, Resorts, or Boutique & Romance sector, Hospitality is back on its feet but there is more to do. Plenty of annual numbers recently being reported show how much positivity there is, with Travelodge reporting EBITDA profit of £212.9M and Best Western intending to have grown by another 100 properties by the end of 2023.
On average circa £900M worth of Hotel sales transact in the UK each year, yet 100’s stay on the market stale, and unsold for considerable lengths of time. But why?
Contact our team or your Personal Broker directly to register your buyer requirements, selling options, or advice on the market in general.
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