hotel Archives - RPA Group

Why hoteliers should be refurbishing during a pandemic

This is when operators who have planned for a refurbishment scheme have the upper hand. One of the key factors when undertaking works is to avoid disturbance to guests. With many hotels now at low or zero occupancy, disruption is at a minimum and works can happen more quickly and efficiently.

The government is currently assisting the hospitality industry by helping with staff costs, and this support offers an added reason why hoteliers should be using this time to carry out refurbishments, if they can afford to – it’s as simple as that.

Having a strong procurement plan and committing to a programme with realistic deliverables and timescales is essential. This is where it is prudent to obtain the support of an experienced Project Management and Cost Management team. After all, there is no point in undertaking a rejuvenation scheme if it becomes sabotaged by spiralling costs and unnecessary delays.

Thinking ahead, what customers will need more than ever is reassurance that the hotel they are checking into is a safe place to stay. Aside from reconfiguring guest flow and ensuring communal spaces adhere to social distancing guidelines, some operators are installing thermal CCTV systems, where cameras can take up 30 people’s temperatures as they walk through the door. Guests are also more likely to spend increased amounts of time in their rooms, where they feel more secure and so these need to offer more than just somewhere to sleep. This could require repurposing areas of bedrooms, for the provision of adequate working facilities. Other increasingly important criteria will include proper entertainment, fast and reliable Wi-Fi and up to date technology.

So, whether hotel operators can embark on large-scale refurbishment schemes, or a series of small but important upgrades, they should be using this time to implement these, ready to entice and reassure future guests when normal travel resumes.

restaurants: high street newbies get a slice of the action

Established chains like Pizza Express, Mr Pretzels, Hummingbird Bakery and Starbucks are doing well, but there’s no doubt that restaurants still need to find exactly the right interior design recipe in order to succeed. More than ever diners are looking for added benefit, both in the food they eat and in the restaurant environment itself and it’s only those that can tap into the zeitgeist when it comes to their look that will survive the choppy waters of an uncertain economy. Two of the most interesting eateries that we have come across recently are MASH and Moment.

MASH, or the Modern American Steak House, may just be one of those right time right place offerings. The hugely successful Copenhagen Concepts, plumped for Soho as its first foray outside of Denmark and looks like its got a hit on its hands. However, restauranteur Peter Trauboth comments that the brand is going to take it’s time considering whether to stick or twist when it comes to a UK roll out, “it’s one thing to play like a world champion at home but it’s another to go to Wembley,” he says modestly. However, at the moment with rave reviews, things are looking good and the 300 seat restaurant that brings style to steak, is a far cry from your local Angus. But, having said that, a big hit calls for broad appeal, and MASH’s interior design has set out to appeal to women, an American inspired trend that is happening throughout the steak world at the moment.

Can we support the growing numbers of steak restaurants? It would appear that MASH is not life threatening to London’s other high end steakeries although its kind could just sound the death knell for the few remaining Angus Steak Houses. Also, on the wave of a new look is Greggs which has launched ‘Moment’, a Newcastle coffee bar concept that leaves the doughnut and the almond slice far behind. More restaurant than corner cafe it sports chesterfield sofas, discreet lighting, and elegant
coffee tables. It deserves to catch on, but I cannot think why they have retained the Greggs identity on the fascia.

All of this is a far cry from the bakery I knew and loved as a 6th former and, as I pause through my first bite of a perfectly frosted cupcake, I wonder if I’ve fallen into a parallel universe. It’s only the picture of Greggs fascia board, uploaded by a puzzled Geordie onto the brand’s Facebook page and succinctly captioned: “Explain?”, that brings me crashing back to earth. With its low cost food and high comfort surroundings, Moment is right for an age of austerity where people are looking for alternatives to expensive high street coffee shops. But does it have the magic that’s needed to hack it on the high street? Some soul searching is obviously going on as Tony Rowson, formerly a senior executive at Costa Coffee, has been asked to look at the brand’s potential for a UK roll-out. So, we shall see.

olympic torch lights up the economy…

After playing our own small part in the mega event of London 2012, RPA is settling down, like so many others, to evaluate the legacy of the Games for Britain.

The euphoric wave of medal winning, creativity and showmanship delivered by The Summer of Sport gave us something more fundamental and longer lasting than a few weeks of top class entertainment. It gave us back something of the confidence and self-belief that had been slowly ebbing away over the past few years of recession. And, perhaps more importantly, it gave us an excellent opportunity to rebuild ourselves, not just at home but abroad. Now British business needs to work hard to take advantage of our new found confidence and build upon it. We need more initiatives like the ‘British Business Embassy’ run at Lancaster House alongside the Olympics. The “embassy” arranged for 4,000 business leaders to attend the biggest trade event ever held in the UK, and helped to generate £1bn of the £11bn of trade and inward investment so far expected as a result of the Games.

As we officially leave recession behind us the economic benefits of the Games have started to kick in. Now, something needs to underpin what we have achieved so far and it’s the perfect time for British brands to embrace being British, associating their products and services with the fundamental values of heritage, passion and style that were illustrated so well in Danny Boyle’s opening ceremony. Maybe it’s time that we revisited the advertising campaign, created by Mother for the British Government in 2011? The campaign, centered around the word ‘Great’ was intended to send out the message loud and proud that this is a great place to do business. Then, against a backdrop of rioting hoodies, it didn’t strike the right note, but now it would be a perfect fit. If there was ever a time and a place to put the ‘Great’ back into Britain it is here and now.

The feel good factor should also help lift the mood on Britain’s High Streets, as the success of the Games is predicted to bring more visitors to the UK in coming months and years. Stores should be planning to take a leaf out of Danny Boyle’s book. After all, he showed the world how impactful ‘theatre’ can be, and that theatre can be translated into the retail environment. It’s important to remember that we are not just feeling different about ourselves we are also being viewed differently overseas. Feedback from colleagues and clients across the globe all boils down to buzz words like quality, innovation and success. There is a universal feeling that Britain can punch above its weight and still has what it takes. Once again global investors are prepared to listen and willing to invest in BrandGB, and that is a legacy worth having.

an “olympic year” for the hotel industry

However, Michael Saunders, of Citigroup, has examined the data from ten Olympics held between 1964 and 2008. He finds that growth tends to rise in the run-up to the tournament, but the effect starts to fall away even before the games begin. Then afterwards, growth tends to be weaker.

Visa Europe’s report concedes: “This is a first for an Olympic Games host market, which usually experience a domestic spending slump during the Games. This will be driven by the public’s enthusiasm for the Games, demonstrated by the high demand for Olympic tickets.” Who is right? We shall see. It is perhaps ironic that a year that brings the largest sporting event that the UK has ever seen may also herald a break up of the Euro. The hotel industry is, of course, international by its nature. If a Eurozone break up was to occur it has been estimated that we could see national currencies devaluing by up to 40%, impacting profits derived from Euro transactions. Fingers crossed…To add to the litany of others, there is the potential threat of the “staycation”, where people choose to spend their vacation time at or near home in order to save money.

However, “holidaying at home” has boosted UK demand, with Butlins and Haven holiday parks seeing a 6% rise in pre-tax profits to £93.4 million in the year to December 2010, thanks to Britain’s ‘staycation’ trend as the weak pound makes it relatively expensive to go overseas. So actually, perhaps that is a good thing. Whatever your take on prospects for the future, it is a fact that the UK leads the way in hotel property sales and investment. In 2010 it topped Europe in terms of hotel transactions, with a figure of €1.9 billion.

In recent years, private equity firms have made big profits through aggressive acquisition strategies. However, they no longer have the influence they perhaps once did at a time when funds are hard to borrow and valuations declining. Some funding is moving back towards traditional models, such as the Feathers Hotel Group, one of the fastest growing hotel chains in the North West of England. They announced in October 2011 that they are to invest further money into their portfolio of three
and four-star hotels with the continued financial support of the Royal Bank of Scotland’s Corporate and Institutional Banking (RBS CIB) team.

Other funding models, increasingly popular with the value hotel chains, are a little more complex. The concept is that a developer, who is often also a contractor, builds the hotel and then leases it to an operator for 25-30 years at a predetermined rent level. The operator never actually owns the hotel. Containing cost is an essential part of making these arrangements work, and so a particular approach is necessary. Planning costs can be minimized by an appreciation of the appetite each planning authority has for such schemes, be they new build or the increasingly popular conversion of 1960’s and 70’s office blocks. An understanding of the necessary occupancy levels and room numbers, together with an operator’s preferred location criteria, footprint and mix of retail and accommodation on a development avoid wasted time and money. Construction utilizing modular techniques may cost a similar amount to that using conventional techniques. However, construction times, even on complex projects, can be substantially truncated – perhaps by as much as 60% – greatly reducing the overall cost of the building. This innovative approach can make otherwise unworkable schemes viable for both developer and operator.

One such value hotel chain, Travelodge, announced in December 2011 that they would target 146 new UK sites for openings in 2012, including 26 new hotels throughout London to be opened ahead of the Games – all within walking distance of the Olympic venues. So clearly the model can be successfully employed. The boutique hotel sector, after undergoing a period of expansion over the past few years, is also proving resilient. Smaller properties commanding higher revenue per room have proved attractive to operators grappling with the economic downturn. Research suggests it is the fastest growing hotel segment in London and is expected to have doubled in size by 2013. In conclusion, it has been said that if you took all the economists in the world and laid them end to end… they still could not reach a conclusion!

Despite uncertainty in the market, smart hotel operators are continuing to invest; to take advantage of the many opportunities that come their way, and to build their businesses. Now is the right time for all operators to identify what opportunities are available to take advantage of, whether through acquisition or redevelopment. Every operator should be looking for a positive advantage, not just preparing for the worst, which may never happen.