Now with Wimbledon etc over and the holiday season starting, the high level of cheap deals in the hotel sector (particularly in smaller and older properties) between July and September is a relatively new feature of the UK market. This begs the question raised regularly in the past few years - is obsolescence going to be a major factor in the hotel industry from now on?
My considered view is undoubtedly so. Our older properties have high maintenance costs, often limited scope for provision of ancillary leisure activities and increasing difficulty in recruiting trained staff and management. Large hotel groups offer a good career, higher salaries, international job transfers, top quality standards in food, facilities, sales and marketing and a great social life so why would the best people attracted to the industry want to work in old properties? If the property is a grand hotel or a unique building then there is a future – more than likely it will be drawn into one of the major groups and become superb.
Closer to my home in suburban london, the budget/medium price groups are expanding in all suburbs. In Kingston a 160 room Premier Inn is about to compete with the existing Travelodge! What future for the small private hotels here?
My advice:
* If you are thinking of buying or running a traditional 20 - 40 bedroom operation you need to be very sure you can survive competition on a scale never experienced to date.
* If you already own a property think carefully before more capital expenditure unless you plan to beat the large, rich, soundly financed groups.
* In the new hotel world you might be well advised to simply convert your property into self catering flats, or take advantage of the demand for homes and do a deal with a builder or developer. I do believe the future for the older concept of hotels in the medium size/price range with 2 to 3 stars is looking increasingly difficult and obsolescence is now something to be considered by owners and operators in a fading sector of a rapidly growing market
Subsidiary to the above, the large number of online offers this month from restaurants is interesting. I cannot remember so many Michelin Star places offering up to 50 per cent discounts, free bottles of wine etc. As the restaurant groups get better they appear to be attracting a broader based customer base – personally I would be cautious about investing in a star chef with a private restaurant, no matter how good it is.