Page 44 - November 2020

RLI LEISURE INSIGHT

Long term Outlook

Hugh Taylor OBE, Founder & CEO of Michels &
Taylor, one of Europe’s leading hotel management,
asset management and consultancy businesses
operating and advising over 70 hotels across the
UK and Europe, discusses the outlook for the
hotel industry post-Covid-19.

hilst we struggle our way through this terrible Covid-19 This time round, it’s very different for many reasons. The hospitality
crisis, I thought I’d share some good news with you. Long industry has been shut down, not by financial issues but because of a national
term hotel investors have been very successful over the health pandemic that nobody could have predicted. This time round, banks
W last 40 years, making good returns. The UK hospitality and the government have granted support which has given optimism and
industry now contributes over £100bn of economic activity in the UK and afforded businesses the opportunity to ride the storm and wait it out.
is a hugely important sector to the economy. The industry employs millions Today the hospitality market is sensibly geared, but if there are no
of people, providing rewarding and prosperous opportunities and careers. customers, there are no profits. Businesses cannot survive indefinitely
The good news is that this will continue. I have no doubt about it. There without cash and within an industry that has been closed for nearly eight
will certainly be some tough months ahead as the Covid crisis is resolved, months there are real pressures across the industry.
but it will come back. Capital cities like London, Paris and New York are international inbound
Historically London has always performed extremely well in the destinations that need foreign visitors to optimise profits. They very much
hospitality sector, even in times of economic downturn and turmoil. In rely on tourism, business travel and the international market so quarantining
the 2008 financial crisis, for example, the hospitality industry took a huge has been disastrous for the market. In August, when people had the
financial hit and whilst other markets took three-five years to recover, opportunity to travel to the capitals, they came in droves and relished the
London only took a year. luxury of travel.
People love socialising, meeting people, doing business face-to-face, going Given the financial structures of hotels, they very rarely go bust; hotel
to conferences and events, eating out, traveling and staying in hotels - and businesses go bust by not being able to meet their financial obligations
this won’t change. Just look at what happened in August this year, when but hotels themselves don’t. They don’t close down; they are sold on and
lockdown restrictions were eased and people were allowed to travel once reopened. Hotels are robust, stable businesses in the long term and have
more. As soon as businesses were able to operate again, people flocked to proven to be so over many decades.
bars, pubs and restaurants; they stayed in hotels, enjoyed the return to the Currently hotels are losing money because there’s no demand. Worse,
“new normal” of that time and hospitality businesses made money again. hotels are not being forced to close so current government support is no
Our current Covid-crisis is unique in my 30 years of hotel experience. longer available as before. Many are losing more money staying open than
It’s unlike the 2008 financial crisis where banks were left very exposed. when they were closed and government support was available. I hope this
Excessive risky lending and real estate bubbles led to huge losses and changes and after such robust support for the early stages of the pandemic,
government bailouts. Banks became unwilling to provide support because government understands that decisions which decimate businesses through
they were exposed themselves, and indebted governments imposed no fault of their own still need help, even if they’re not closed. Indeed,
austerity measures, which slowed the broader recovery. Hotel owners with particularly as they’re not closed.
excessive leverage positions were forced to close or sell. However, banks So has anything changed structurally that could affect the way we
recovered and so did the economy. consume hotel experiences? There are of course changes in play within
hospitality, some of which were evident pre-Covid and some as a result.
Indeed, this is an ever-changing sector, and I have always liked to think, for
the better. Zoom and Microsoft Teams has demonstrated ways in which we
can work differently but personally I think people found it useful initially and
now crave face-to-face meetings. We’re human, we’re social animals.
It may change elements of the business travel market, particularly
overnight, single meeting stays, but the majority of business travel will
continue as before.
The UK hospitality industry has a strong competitive advantage, and has
one of the best product offerings for tourists and business anywhere in
the world. Our theatres, business centres, parks, tourist attractions, bars,
restaurants and hotels are all world class and tourists will never stop wanting
to visit our country. That’s not to say that hotels can be complacent through
the economic recovery and will need to adapt to changing customer
needs; new products, new reasons to stay, effective communications, health
and safety protocols, attractive environment and most importantly good
management are paramount to the success of businesses.
Whilst we are clouded with uncertainty with ever-changing rules
and restrictions at present and the storm is looking bleak, the future of
hospitality remains bright and positive. The hospitality industry has always
been extremely robust and given the professional nature, outstanding
leadership and market-leading position of our industry, all signs indicate that
it will return to its former glory and continue to strengthen into the future.

44 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2020