One of the pleasures of staying in a good hotel is the breakfast buffet. Guests who at home would usually grab tea and toast can tuck into exotic fruits, yoghurts, waffles and pastries before helping themselves to a full English, limitless coffee and juices.
No longer. The pandemic has brought down the shutters on most of the UK’s hotels and when the lockdown is lifted, according to one industry consultant, there will be a noticeable gap in the dining room where the all-you-can-eat breakfast buffet used to be laid out.
Russell Kett, 66, chairman of HVS London, a hotel advisory firm, said: “Hoteliers will need to rethink almost every part of their business, focusing on all areas that are accessed by guests as well as considering the safety and protection of staff. The buffet breakfast is likely to become a thing of the past, at least for the time being.”
Intercontinental Hotels Group, which has almost 6,000 hotels, including 355 in the UK, has already dispensed with it. Keith Barr, 49, chief executive, said: “We’ve gone entirely à la carte and pre-packaged for breakfast.”
Social distancing is the biggest barrier both to the restoration of trading and to making money again.
The 109-room Metropole Hotel & Spa, in Llandrindod Wells, Powys, recently posted a telling photograph on Twitter showing one of its meeting rooms laid out under the two-metre distancing rules. Justin Baird-Murray, 55, managing director of the family-owned hotel, said that a room that could previously accommodate 130 people would now only seat 22 and he estimated that revenues for an event would be cut from £5,500 to £880.
“We can survive but only by borrowing money to mitigate the losses we make while social distancing is in place, which is not a viable business model,” he said. “If social distancing is not lifted by 2021 I seriously doubt we will be able to maintain the support of our bank.”
Andrew Sangster, 53, editor of Hotel Analyst, said that the businesses least badly damaged would be the well-known brands offering limited service and eschewing frills such as gyms, spas and fine dining. “The big surge of interest we have seen in the last decade or so towards boutique and trendy is likely to falter,” he said. “Before, everybody wanted interesting and exotic. Now nobody wants interesting and exotic.”
With customers seeking reassurance over safety, Mr Sangster predicted that independent hotels would struggle against their better known, better capitalised big brand rivals. “Whitbread, which owns Premier Inn, is amongst the best placed in this regard,” he said.
Derek Gammage, 57, non-executive chairman of CBRE Hotels for Europe, Middle East and Africa, agreed that budget hotels and apartment hotels would have an advantage over luxury. “They will do well because guests can self-isolate and order takeaways, plus there’s no need for human interaction either at check-in or checkout,” he said. “It’s very difficult to have a resort experience if you’re not able to enjoy the pools, restaurants and bars.”
Hotels that relied on international travellers would find the going tough. “I for one won’t be getting on a plane any time soon,” added Mr Gammage. “How can Easyjet block out the middle seat without making it prohibitively expensive for me to fly? And the prospect of even longer queues at airports and 14-day quarantining is hardly enticing. What you’ll see is more staycationing and more self-catering.”
Not all hotels in the UK are closed, however. Some are housing key workers or homeless people, although rates are very low. According to STR, which provides data on the hospitality sector, occupancy levels in those that remain open is between 20 per cent and 25 per cent, with the average room rate last week down 36 per cent compared to the same week last year. Revenue per available room, the key metric, is down by 80 per cent to 90 per cent. Thomas Emanuel, a director of STR, said that the average daily rate in London fell by 47 per cent last week, which he described as “staggering and completely unthinkable just a few months ago”.
At those levels, hotels cannot make money and even after they are released from lockdown — this will probably be one of the last sectors to get the green light — few if any will be profitable in the foreseeable future. While government initiatives such as furloughing, business rates concessions, tax holidays and loans have helped to stave off the corporate undertakers for now, Mr Gammage said that casualties were inevitable — although he suggested that this was no bad thing.
“It’s not all negative. We need a shake-up anyway in the hotel industry. There’s a stack of room stock that has had no investment and is poorly run. It won’t be a case of the banks pulling the plug but the hotels simply running out of steam. They need to be repurposed as care homes and the like.”
According to Mr Sangster, “because this is not a banking crisis but rather a supply shock that has become a monumental demand disaster, banks that have financed hotels are more likely to be willing to take back assets and hand them over to new investors. There remains a wall of money circling the sector looking for deals but most likely it will be well into 2021 before we see a lot of hotels change hands.”
With airlines forecasting no recovery until 2022 or 2023, the UK hotel sector — part of a wider hospitality industry that employs 3.2 million people directly and a further 2.8 million indirectly — is likely to have to rely on domestic customers for some time, although the corporate market may be depressed by the realisation that many meetings can now be held online.
Harry Murray, 80, chairman of Lucknam Park, a luxury country house hotel near Bath, said that although country house hotels would suffer a hit to their events business they would fare better than city centre hotels by virtue of having the space to deploy social distancing. “Guests can dine from room service or in well-spaced restaurants or enjoy outdoor dining.”
So when will the hotel industry recover? “This pandemic is likely to change our habits until a satisfactory vaccine is developed and consumers will be cautious about using hotels until their trust is restored,” said Mr Kett at HVS. “Longer term we are confident that the European hotel sector can bounce back to levels experienced in 2019, although it may be 2022 or 2023 before this is accomplished.”
Mr Barr predicted that IHG’s domestic business would come back first. “International long haul travel will be the slowest to come back. City centre hotels, particularly at the top end, will take longer to recover because of their reliance on inbound travel.”
He accepted that it would be “very challenging for the industry for the foreseeable future” but he is confident that people will return to working in offices and travelling to meetings.
“People do want to connect with people. We think we will get back to previous levels but the trajectory is unclear. Economies will begin opening up because governments have recognised that this level of economic impact from lockdown is not sustainable.”
Five-star hygiene will be vital
When hotels finally throw open their doors again, the priorities of guests are likely to have changed. Customers who previously made a booking based on whether a hotel had a luxury spa or was next to a beach may be more interested in cleaning and hygiene protocols.
Some of the big chains are forging alliances with cleaning products manufacturers and healthcare experts. Hilton has teamed up with Reckitt Benckiser, maker of Dettol and Lysol, to launch a programme that in America, where the hotel sector remains open, has been named Hilton Cleanstay. The group said the scheme would bring RB’s scientific know-how to bear on its cleaning practices while infection prevention experts from Mayo Clinic would advise on “enhancing Hilton’s cleaning and disinfection protocols”.
Measures in guest rooms will include extra disinfecting of frequent “touch-points” such as light switches, door handles, TV remotes and thermostats, while the company is exploring new technologies such as electrostatic sprayers, which use an electrostatically charged disinfecting mist, and ultraviolet light to sanitise surfaces.
The draft protocols being drawn up by UK Hospitality, the trade association, include not only enhanced hygiene and sanitation during a guest’s stay but also a deeper clean between stays.