Current issues in the hotel sector



hello my name is Judith cook down and I am corporate service Smalling and today's video is aimed at the leisure sector and I have with me Andy Townsend from legacy hotels Andy is a CEO of legacy hotels under serial he'll tell you and today we're going to do the first of a series of three videos where we're going to look at the leisure sector and and these experiences of how things are going at the moment Andy before we get into the current market I'm interested to know a bit about your background and what you did before you set up legacy hotels in 2005 sure my experience goes back to very much early days my fam come up through the brewing background but my arrival in hotel business was with Devere hotels the south coast the old green or winged days and then I joined a Whitbread hotels when we helped create and develop lansbury hotels it was and the portfolio alongside country club hotels the disposal of lansbury hotels I then joined stachys hotels and the time we were creating country court properties one of their sort of sub brands at the time and I joined them operation both in Northampton and then up running their flagship property up in Scotland dunkeld house which is 280 acres of perthshire countryside and their timeshare resort business up there we through the time I work stack is then acquired Clayton berikut will decide and I was far too vocal in the company when it came to food and beverage and so on the be careful what you wish for strategy i was deployed as the grouped food and beverage director working for the center and then hotel history says that stachys were brought by hilton hotel group and hilton hotels in essence will turned up in watford from our glasgow offices i became the food and beverage director for hilton group i did that for a couple years and created the food and beverage concepts across both the hotels they live a more leisure and casino business I then had an opportunity in early two thousand one to join Donald MacDonald of mcdonald hotels the Scottish based hotel company who had its capacity at some point was about 127 hotels and I joined on all the time when he was doing the public to private a management buyout the acquisition of heritage hotels from Granada compass and also the acquisition of rain fifty percent of the resort's business the UK Spanish resorts business which was part of Barrett international results Barrett's the house builders at the time I did about five years with Donald as one of the divisional directors the first half of my time was his management director of the UK in Spanish resort business which was very interesting it was the oldest fixed week fixed eunuch timeshare business 32,000 owners 29 half thousand you strip out multiple week owners and helped create that business through both a rebranding and move it from its traditional fix week model into its resale and an automatic vacation club model and then the latter half of my tenure with Donald's business was as managing director of its managed business it's managed hotels where we ran three or four star hotels across the UK but got fairly frustrated with corporate life in the early part of 2005 and added opportunity to set up our own business had the the backing of a good friend then customer now shareholder in legacy who through his checkbook across the table and that was in the April of 2005 and we transact eighteen and a half million pound of his money september's the sixteenth 2005 let say eighteen and a half million pounds of his money and we brought three X chorus hotels and that's what what got legacy started the reality if we fast track we are in our ninth year of trading we're a management services company dedicated to the three or four star unbranded hotel sector we're not one of the virtual companies which is consultant later revised we LED and today we operate assets to the tune of about a hundred forty nine million pounds worth of assets about 1300 bedrooms across the portfolio an active as a disclosed agent about 600 staff under our guidance and stewardship and we've had a variety of different assets and we've operated as far up as Gateshead across in Preston when we opened our first hotel as a new build project in the back end of 2008 down into Wales three or four projects and Wales down a cliff currently out on the isle of jersey and around so quite a lot of reach typically in the hotel sector variety of projects from small 810 bedroom hotels to 100 hundred twenty bed hotels and even did a 10,000 square foot student bar couple is going the center of the pool which was a diverse dissemination so you clearly have got a lot of experience in the sector and I need to know how you think the market is currently performing and how we got to where we are I think if anyone actually knew all of the answers will be fairly rich the router years i think if we can all commonly just agree that the music stopped in october 2008 I think what we found at that particular point in time is that the heady madness had been going for some time and a lot of us didn't see it the reality is at that particular juncture in time there were a number of hotel assets whether they be in London or whether they be in the provinces and I think it's widely accepted down as easy now the Casey's is London is pretty much unique marketing mix of its own but but he's generally I think recognized that the music stopped in 2008 the assets that were underperforming under invested and had poor management leadership the SAT around them would dealt with fairly quickly by their investors their banks less they comes at a time the reality is that we've traded through that difficult period but even the good hotels in October 2008 that would be a well-managed incredible hotels in their own marketplace have continued through what is one of the longest recessions any of us can remember and even at that particular juncture of time seven or eight years down the line there now needing onward capital our normal capital isn't as readily available so we've now got a situation where good assets in their marketplace are now being eroded where values much more difficult to grapple with so do you see the corporate and commercial business Quinn back to the same level as pre-2000 in a crash oddly enough I don't think so what we're seeing is the volumes are pretty much still there and I think that I think there was a period of time where post to 2000 or mediately post 2008 there's a lot of retrenching there's a lot of travelling travel managers and finance directors across the corporate spend categories that use that opportunity to a lot of culling a lot of clearing out which if we're frank would probably needed to be done regardless they're being in recession in terms of travel spending travel spam policies and corporate activity I think the volumes are there or there abouts and whether they come back to that same level of of the big annual conference and the big corporate spending that sort of sort of thing probably not what we're definitely finding a side of the volumes is the pressure rate we're probably finding twelve to fifteen percent backwards in terms of the rates that were being achieved by those corporate customers from where we were in 2008 are that's coming from buying power and I have a volume of business to place with somebody and this is my price tender still read you want it or not there is some opening that goes on of product you get to pitch for business and and its competitive in that environment but price continues to be to be king the migration of the corporate business to the corporate overnight conference 24 hour residential conference business isn't around as much I'm not saying it's not there at all that's not around as much the day delicate business of the day business is much more what we see and we see a lot more of the individual day businesses being held in house a lot of companies have smaller many businesses have their own meeting rooms in the search like and some of the barometers you see in that is when you look at your hotel lobbies we see hotel lobbies that are really busy with people crammed round coffee tables with cups of coffee and that's awesome but I guess he's great for coffee sales but the reality is that the requirement for these meetings is still happening much of the time but they're just not putting the same spend around it so I guess in summary I doubt we're going to get bad for some time to those sort of levels without there's a German admonishment the things were a wee bit fat at the time and it should have got to that stage anyway and so looking forward short term how do you see the market going in the next 12 to 18 months that's a real difficult call I think that there are glimmers of hope around the regions but nothing of any consistency and nothing I think you can build a business case for massive step changes in performance what we can say about the next 12 to 18 months is that customers are going to continue to look for value for money there's gonna be pressure on pricing but if you set around that perspective what we're definitely seeing is continued increases in shorts continued increases in utility pricing continued increases in food and liquor pricing the government's continued pressure to push through annual October national wage increases and of course we're getting our heads around the cost of the altar enrollments in the man coming forward so I see a lot more pressure around the costs that are very much not discretionary from the operators perspective and it being much harder to get that level of cost increase passed through to the customer so I hotel it's need to be a lot more convincing a lot more dynamic in their thought process and so going on from your point that Hotel you need to be a bit more clever bit smarter and how does that impact on the leisure segment market house up and moving along accepting the provinces are still very different from London continued pressure I've gone are the days of our hotel is can rely simply on their location and having a ensuite bathroom color TV they now have to advertise and market more directly they have to think about packages and value for money and there's considerable pressure now on value for money the problem is that if you look into a competitive setting a lot of operators have sadly vanity ego kicking around them particularly independence in terms of their product and where it sits in the marketplace but the reality is anyone that has a bedroom in that local marketplace is a competitor and we have to be a lot better now at pricing our product and the reasons why people will come to stay gone are the days typically where people are going to go and take a week's holiday in a you co uk hotel location sadly few and far between the two night breaks that all packaged them around it and people are moving more more so now I think to this one night stay in these day trips that sit around it so we've got to get a lot cleverer putting value for money in it and when I say packaging a value for money if you don't do that with the transparency that the internet provides you end up by not doing packaging and dynamic pricing you end up on this virtuous spiral downwards where you just have an eroding price headline price that you compete against there's no way up from that aspect I think the other thing we have to bear in mind is without putting reasons why people are going to come to that location and it is about selling the location we just happen to have the places for them to sleep when they get there is that people believe it's their god-given right to a summer holiday and I think days gone by there was this belief that the summer holiday was something that was a special we've saved up for that socially but I think we live in a lifestyle whereby it is a necessity and people will forego other things in fact I particularly know of a friend of mine who's forgone private health care for his family and new earth going on a foreign holiday and that's nothing and the reality is that that is always going to be the case but in the old days when I say old days I'm a premium going back five to ten years the normal demographic and somebody would take her a two-week foreign holiday in the Sun and they would do two or three leisure breaks between the course the rest of the year lows leisure breaks her maybe once or twice if it best and perhaps not at all and in some cases day trips so we have to work harder for this sort of it's been called the staycation or whatever we have to work harder given reasons why people will come and stay at our hotels around the provinces really thank you very much in the forthcoming and videos that we're going to be doing and we're going to look a bit more about how and hotel ease can improve on their performance and sort of markets that are out there at the moment and so it just leaves me to thank candy today for coming injured and spending your time with us thank you very much for watching this video if you found it interesting and would like to watch more then please click on the link below or you can watch via subscribing to our YouTube channel you

Author Since: Mar 11, 2019

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