The Hotel Booking Agents Association annual forum, held in Manchester, attracted more than 300 hospitality industry agents and suppliers – and Bob Papworth
THE UK’S NEW “experience economy” – typified by money spent on eating out, going to the cinema, attending football matches and staying in hotels – is helping to buoy the country’s hospitality business, according to industry guru Ian Gamse.
However, in his keynote speech at the Hotel Booking Agents Association’s (HBAA) annual forum in Manchester in September, Gamse – a director of finance and travel advisory service Otus & Co – warned that growth could be hampered if companies failed to invest in their hotels.
“There must be 50,000 rooms in the UK that should be bulldozed tomorrow,” he said, arguing that the emergence of the “experience economy” meant consumers have become more discerning.
Continuing upgrades and improvements would mean that while hoteliers face commercial challenges in the short term, longer term prospects will be much brighter.
“The crystal ball is cloudy,” he said, “but the next two years are going to be tricky.
“In this country we have some serious structural problems with the economy, and that’s particularly acute for our industry because of the public sector cuts and the lack of confidence, the lack of growth and the lack of funding in the private sector. It’s going to have a major impact.”
That sentiment was echoed by HBAA chair Juliet Price, Hotelzon UK’s head of marketing and business intelligence, who told the forum’s 300-plus delegates: “The tough times we are going through at the moment certainly aren’t over yet.”
Looking farther ahead, Gamse was more upbeat: “Medium-term prospects are good, because the UK is continuing on a trajectory where it is building up the services industries and building up the experience economy.”
Although hotel sector growth has outpaced gross domestic product (GDP) growth over the past 10 years, Gamse stressed that “it’s not about the GDP itself, but about what goes into the GDP. If manufacturing industry is in decline, that’s a great pity, but it doesn’t really affect the hotel industry very much.
“As long as the service sector keeps growing, the hotel sector will continue growing.”
However, as businesses have matured and built their own office infrastructure, and as specialist event venues have developed their offering, the nature of business demand has changed, he said.
“My impression is there was a period in the 1990s when hotels were converting bedrooms into meeting rooms,” Gamse told conference-goers. “That has now been reversed and meeting rooms are being converted back.”
The trend has also changed the UK hotel landscape, he suggested. Out-of-town hotels, with little passing traffic, and therefore heavily reliant on the meetings and events business, are suffering, while town and city-centre properties – “where the business is” – are faring better.
BACK TO BASICS
Furthermore, business travellers – and their employers – are concerned only with a good bed, a good shower and maybe breakfast. The limited-feature segment – made up of what Gamse described as “hotels with little more to offer than bedrooms and a bar or cafe” – has grown rapidly as a consequence.
“The profile of the UK hotel market has changed enormously over the last 10 years”, he says. “What we are seeing is a shift in demand away from up- and mid-market feature-rich hotels, to those that are both at a lower market level and with only few non-room facilities.”
THE VAT FACTOR
Value-added tax (VAT) was another topic on Gamse’s agenda. “VAT on hotel stays is two or three times what it is in Europe,” he complained. He also urged hotel industry leaders to campaign for the removal of “bureaucratic obstacles” – visa requirements among them – to business travel, and for increased government spending on overseas promotion of the UK as a business tourism destination.
However, he also suggested that hoteliers should step up their own international sales and marketing activity, improving websites and online booking channels to attract foreign buyers.
“We need to start looking overseas for events and meetings demand by forging relationships to make that happen. UK hotels and venues need to capitalise on the demand that global and international brands can provide.
“Right now, we are seeing huge demand from China, and from Asia in general,” he said