Last month I cautioned investors/hotel buyers to think twice before investing in small hotels in the same market as Travelodge/ Premier Inns/Holiday inn Express as I do not believe you can compete on price or facilities as these three chains develop. Some of our clients took this to be against all small hotel investment which is not the case. You only have to look at the latest figures from Small Luxury Hotels (SLH) which, just last week, reported that revenue and reservations are at a record level.
SLH has hotels of primarily 4star standards with a wide range of facilities , leisure activities and interests, excellent restaurants and personal service associated with traditional hotel keeping – the things the budget chains can never emulate – -and guests will pay for quality and service.
Successful hotel operations particularly in small hotels need a unique style and ambiance with
personal management and a sound financial base to ensure the long term growth of a repeat customer business and guests who will tell their friends about your great hotel and all it has to offer.
It will never be an instant profit maker but as the business develops the rewards can be very attractive both financially and personally.
Here at CALPE we have the knowledge and experience to help you enter the hotel business or develop and expand your existing operations with Small Hotels of Quality.
However if you want to invest in budget hotels then a shareholding in the big chains like Whitbread for Premier Inns, or IHG with its Holiday Inns Express brand should appeal.
All our clients now appear to be having a successful summer season and we look forward to the autumn and their plans for the forthcoming year.
Squaring the circle
Around two hundred years ago Britain was boosting its economy from the trading activities of its merchant and banking businesses in the opium/heroin trade in China. From this time were acquired the enclaves of Shanghai and HongKong. In turn many Chinese moved to the UK and the period 1950 to 1980 saw a proliferation of Chinese restaurants across the country. The return of Hong Kong to China at the end of its lease coincided with the change in trend to Thai food, the rise of pizza chains and the decrease in the number of Chinese outlets. Then last week Pizza Express was bought by Chinese investors which will once again make Chinese owned restaurants a major part of the UK catering industry and we can look forward to a chain of Pizza Express outlets across the Far East. On my last visit to Shanghai there were French/Australian etc restaurants to choose from in addition to fine dining on the Bund and now there are 10 Pizza Express outlets as well.
With the spectacular growth of our two international catering groups in China, Intercontinental Hotels and Compass Catering, it looks like we have another winning formula in Pizza Express making it more important than ever that Chinese visitors are no longer restricted by visa regulations if they need to visit the UK at short notice and trade between us can grow to our mutual advantage.
And for those of you who might want to visit the highest Chinese owned restaurant in London then visit The Shangrila Hotel in the Shard. Great food, fantastic view but not Pizza Express prices.
And if you don't like heights The Oxo Tower overlooking The Thames is another rest Chinese owned restaurant
The challenges facing the independent hotel owner
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.
Summer dining under contract
June and July are the months when, every year, I experience fine dining from what many might regard as the most unlikely source – contract caterers.
An evening opera at Glyndebourne includes a choice of three restaurants each offering a menu which many of the fashionable restaurants would find hard to beat, even with their star chefs and their wonderful and regular imaginative PR promotions. And the caterer is none other than the Compass Group, the world's largest industrial and commercial contract caterer which serves meals daily in over 50 countries yet still has its Head Office in Chertsey, Surrey. Compass is one of Britain's great success stories yet few people know about it. The meals – both afternoon teas and evening dining during an interval in the programme – are all part of our unique English lifestyle in the Sussex countryside..
The following week my wife and I joined a Thames evening dinner cruise with Bateaux London. That was another superb meal – perfect service, a delightful modern cuisine and excellent wine, this time from Europe's second biggest contract caterer, Sodexo. Dining on either the Harmony or Symphony French style bateaux includes the traditional nightclub atmosphere with a small group playing throughout the cruise while one sees the rapidly changing waterfront of the Thames from Westminster to Greenwich. Sodexo is a French company operating in 40 countries and I still remember an excellent salad lunch at one of its outlets in Brazil some years ago. Last week I missed the the sailing of their Harmony boat due to a fire at Somerset House gridlocking the roads nearby. Bateaux London kindly found stopping traffic in nearby Aldwych, but they found us a table on the next sailing of the Symphony an hour later. Customer service at its best.
A West Country Weekend
You can spend your business life in the hotel and tourist industry yet continually find something new. The other Thursday I decided to give the weather forecasters the benefit of the doubt and plan a weekend to enjoy the promised hot weather. My brother-in-law suggested a weekend at his 14th century cottage in Somerset and a night at the opera In the Quantocks – he could get tickets for Rigoletto in the open air in the grounds of the 18th century Crowcombe Court. It was a really enjoyable Saturday evening: the setting was stunning, Rigoletto was produced superbly by Opera Brava and Laura Pooley gave a fantastic performance as Gilda.
The following morning we fuelled up on a truly delightful country garden breakfast as crows and seagulls flew overhead and an ever watchful buzzard hovered before heading off to Britain's smallest city – Wells. I had seen pictures of Wells Cathedral but none do it justice – it was one of the most amazing churches I have visited. Our next stop was a mere 20 minutes away – the village of Bruton and luncheon At The Chapel. In fact a former chapel converted into a stylish restaurant where the atmosphere, food and service were even better than its reviews had promised. After a delicious meal, Barbara and I wandered through the old village and came across Sexeys Hospital. This was built in the 16th century by Hugh Sexey, auditor of the Exchequer to Queen Elizabeth I, as an almshouse. Perfectly preserved, it's still in use today providing independent living for the relief and maintenance of 'elderly persons of honest life and good reputation'.
A great weekend in the English countryside
WATCH: an introduction to Opera Brava here http://www.operabrava.co.uk/page_Videos_25.html
La Dolce Vita
Finding where to fill in an hour or so between one meeting and the next used to be a problem until I found Carluccio's. It has everything I was looking for great breakfasts (for a refuel after that early morning meeting), the best coffee, freshly baked croissants and a simple but tasty lunch menu. One evening I even enjoyed a selection of popular opera performed by four excellent singers. But apart from the food, what really makes Carluccio's different from the other chains is the friendliness, efficiency and professionalism of their operations allied to the atmosphere and layout and, of course, the obligatory free wifi.
Why do I mention all this? Because I have just seen a summary of their latest trading figures which are by far the best of any UK restaurant group. In an industry where many are struggling to survive from excessive borrowings, discounting to maintain cash sales levels, employing poor untrained staff and offering menus with cheaper quality foods, Carluccio's accounts show success with sales up 20 per cent, profits up 19 per cent and apparently earning the highest rating from the Sustainable Restaurant Association.
It appears I am not alone in enjoying the offerings of this success story.
PS. I am in Yorkshire next week so will use my downtime between meetings to investigate their new restaurants in York and Harrogate!
ATTRACT CHINESE TOURIST INVESTMENT & VISITORS TO THE UK NOW!
Chinese tourists continue to pile into visa-problem-free Paris and Hong Kong investor KAI Holdings buys the Champs Élysées Marriott freehold for £345million. Could Paris' £500million Intercontinental Grand be next on the Chinese list as IHG continues its disposal and management only policy and the UK reviews its visa restrictions?
Tourist industry experts reckon we could treble our Chinese visitors if we relaxed our visa restrictions – which are currently resulting in more Chinese tourists visiting European cities than London.
With the Chinese Premier in London this week we should act now and boost our tourist business and boost our economy. See our economy soar with an extra one million visitors and watch IHG shares when the Home Office eventually acts!
With some of the most attractive tourist choices in Europe it baffles me as to why are we forcing Chinese visitors to the rest of Europe? On my last trip to China I had no visa or passport problems in Hong Kong or Shanghai. It took just two hours to renew.
And businesses are suffering – I experienced this first hand last year at one of my hotels when a Chinese group relocated a meeting at 24 hours notice from the Thames Valley to BRUSSELS due to visa delays .
David Scowsill, president and chief executive of the World Travel & Tourism Council, sums up the situation clearly in Director Magazine:
“The monetary and indirect costs to visa applicants from waiting times and cumbersome application processes deter would-be travellers and divert demand from the UK to other destinations, which undercuts our competitive position for increasing travel and tourism exports (or money spent by foreign visitors in the UK).
China's economy empowers its citizens with money to spend on overseas trips. VisitBritain says the average Chinese visitor spends about three times as much – £1,600 – as the average international tourist to Britain. Yet the UK is losing out on thousands of Chinese visitors to European neighbours because those tourists face more obstacles – such as higher fees and a lengthier application – to travelling here than to most other destinations on the continent. Having the application in Chinese now helps. But other changes in the system must happen.Chinese outbound travellers totalled more than 70 million in 2011. Yet Britain welcomed only 149,000 of these compared to the 1.1m who went to France. The UK's absence from the Schengen agreement – which allows visits to 26 European countries on a single visa – compounds the problem. I understand the political discussion around Schengen but, in pure monetary terms, it is inflicting huge damage. The UK China Visa Alliance, which includes retail and tourism organisations, estimates that £1.2bn is being lost annually.”
As players in the travel and tourism industries it’s important that all our voices are head – no matter how big or small your business. Write to your MP and urge the government to look at smart visa solutions and programmes so that Chinese travellers – both business and leisure – can enjoy our country and so that our travel and tourism industry can fulfill it’s true potential.