UK hotel market: Cautious optimism from The AHC Advisory Board

AHC AB

Following the announcement that The AHC Reimagined: Reconnecting UK Hospitality will take place on the 8th October, members of The AHC Advisory Board kindly assembled, for the second time this year, to discuss the world we now find ourselves in and the content, themes and subjects they feel important to be included on the programme for The AHC Reimagined. The AHC is fiercely proud of its close connection to the UK hospitality industry and the views and opinions of those in the sector form the backbone of the event. 

With Advisory Board members including representatives from independent owner/operators, international brands, extended stay, DMOs, developers, funders, landlords and advisors, unsurprisingly the experiences of the last 127 days varied significantly.

Robert Alley, Chief Operating Officer, Roomzzz Aparthotels described March as “chaotic” but with 80% occupancy in April, May and June the group have been “incredibly busy and had to learn quickly.”

Considering the relationship with operators and banks, Peter Anscomb, Senior Corporate Director, Edwardian Group London said that “most banks are understanding and responsive and whilst the processes have been longer due to extended timeframes, they have not been harder.“ This was echoed by Dan Williams, Head of Hotel and Real Estate Finance, Clydesdale Bank who felt that unlike the GFC, banks are in a very different position and “focussing on supporting existing customers and recognising their challenges.”

Bill Cross, Owner, Cringletie House said: “The Coronavirus job retention scheme was a lifesaver for us” but he remains apprehensive over the stability of future booking and forward trading with the current government restrictions in place. David Curtis-Brignell, Deputy Chief Executive, Visit Kent explained that they had recently hosted Oliver Dowden, Secretary of State for Culture, Media and Sport at Knebworth House and requested more flexibility in relation to MICE business and a sliding scale capacity that allowed larger venues to host larger numbers of people. 

Ben Harper, Managing Director, Watergate Bay and Another Place said early on his team stopped trying to predict and instead started to look at every area of the business and re-set which he described as “the most insightful and liberating experience of my career.” Whilst the business is currently benefitting from serving the domestic leisure market and operating at full capacity due to the pent up demand, Harper said he is "in a relatively positive position but mindful that the full extent of the economic unfurling means the worst is yet to come from an economic perspective.”

Lissa Engle, Managing Director, Berkeley Capital Group, talked through her unique view from all sides of the table including the challenges of managing a development site during lockdown - Hyatt Place London City East is due to open 2021 – an early review of refinancing post development, the impact of revised valuations on new development projects and also announced the launch of the first UK hotel financing report by Berkeley Capital Group 'UK Hotel Market Structure & Financing Report 2020' in collaboration with Dr Nicole Lux at CASS Real Estate Research Centre which “will examine who is really open for business, what the rates are and whether the cost of capital has changed over the last few months.” The report findings will be shared with delegates of The AHC Reimagined.

Patrick Grant, Partner & Head of Origination, Real Estate Alpha Real Capital said that “whilst the sector remains an area we believe in and see ourselves continuing to invest in, the material uncertainty clause remains an obstacle and has had differing degrees of severity of affect.” Asked what will occasion the lifting of the material uncertainty clause, Grant replied: “It’s a circular argument with the valuers seeking transactional evidence before lifting the clause and institutional investors not being able to invest capital whist the clause is in place. Having worked with the valuers and either existing or proposed tenants, we now have various scenarios upon which we can base pricing commercially, however until the position is relaxed we can’t complete transactions.”

Graham Dodd, Managing Director, Development - UK & Ireland, Hilton spoke of signs of encouragement in the UK provinces but echoed fellow speakers concerns over the lack of forward visibility. Dodd said the objectives for the group were to understand how to “open hotels safely, profitably and hospitably.” A sentiment echoed in a recent Insider column for Hospitality Insights written by Alexi Khajavi, President, Hospitality + Travel Group, Questex.

Philip Lassman, VP Development North Europe, Accor reminded the group of the withdrawal of the 2019 dividend payment and allocation of 25% of the planned dividend to launch Accor’s ALL Heartist Fund as well as various other health and safety protocols and partnerships including the agreement with AXA for complimentary medical care to guests. On development for the group Lassman said they would be “utilising their conversion brands” and he feels that the UK, as an island nation, may avoid the second wave issues that Europe is experiencing. 

Diane Scott, Senior Hotels Consultant at law firm Katten highlighted the importance of bringing the customer back: ‘clearly the safety of today’s guest is paramount and how this is messaged by hoteliers to encourage guests to feel confident enough to book will be key, not only this will need to be an ongoing message to retain customer loyalty, my view is that hotels/serviced apartments will have to work hard with consistent messages’.

The group felt that a future focus was important for The AHC Reimagined content as was a programme that is very dynamic to the circumstances of the time. Insight into policy making and lobbying was requested in order to keep the sector front and centre of the government’s agenda. Innovation in operations was cited as a key topic as we work together to understand how to get back to delivering great hospitality in a light touch world. Case studies highlighting brilliance, inspiration and positivity were invited as was a financing session with a deep awareness of the funding market. Finally, as the recovery unveils and we continue to realise that what the guest wants does really, sharing consumer trends and mood indicators was asked for as was an understanding of the new world of business and corporate travel.

The AHC Reimagined will be broadcast from a professional recording studio with state of the art audio/visual equipment. Speakers will present from the studio enabling the fluid and spontaneous engagement much missed over the recent months. Meeting software powered by AI and extensive data will facilitate 1:1 networking that is both meaningful and valuable and sponsors will have proper visibility and connectivity through video content and lead generation. For further information, please visit www.hospitalityinsights.com/ahc.

Our sincere thanks to the following for their time, experiences and opinions:

  • Robert Alley, Chief Operating Officer, Roomzzz Aparthotels
  • Peter Anscomb, Senior Corporate Director, Edwardian Group London
  • Bill Cross, Owner, Cringletie House
  • David Curtis-Brignell, Deputy Chief Executive, Visit Kent 
  • Graham Dodd, Managing Director, Development - UK & Ireland, Hilton
  • Lissa Engle, Managing Director, Berkeley Capital Group
  • Patrick Grant, Partner & Head of Origination, Real Estate Alpha Real Capital
  • Ben Harper, Managing Director, Watergate Bay and Another Place
  • Philip Lassman, VP Development North Europe, Accor
  • Diane Scott, Senior Hotels Consultant, Katten
  • Dan Williams, Head of Hotel and Real Estate Finance, Clydesdale Bank