Hotels, pubs and restaurants are facing the biggest crisis in living memory, according to the UK Hospitality trade association, with one in ten properties at risk of closure over the winter, partly as a result of the energy crisis.
The latest Hospitality Market Monitor from the market researchers CGA and the management consultants AlixPartners shows that 2,230 licensed premises closed down between June and September, which translates to an average of 24 per day.
Recent casualties include Crockers in Henley, Surrey; the popular Fox Hall Inn in Richmond, North Yorkshire; the Great House hotel in Lavenham, Suffolk; and the art deco Aberdeen Northern Hotel. In Chester the Bridge Street Townhouse hotel has been mothballed for a year in an attempt to save the business, with its owner, Steve Hesketh, blaming the continuing staffing crisis, rising energy and service costs and the impact of Brexit.
Crockers at Henley, which was included in the Sunday Times’ Best Places to Stay list for 2020, has been forced to close
“Energy prices rose by up to 200 per cent in the first quarter and by up to 400 per cent in the second,” said the UK Hospitality chief executive, Kate Nicholls. But even though gas prices have seen sharp falls — from £6.70 per therm in August to £1.80 last week — some analysts say that the pressure on operating costs is unlikely to ease before 2024.
“Room rates rose by around 10 per cent in June,” Nicholls said, “but with overall costs now up by around 18 per cent and rising, half of our members are not breaking even, and that’s not sustainable. We will inevitably see more closures — potentially one in ten — in the independent sector this winter.”
Survival strategies include taking rooms or entire floors off sale, reducing services, cancelling events such as Christmas parties that are dependent on ticket sales, closing down for part of the week or going into full hibernation — like the White Hart Inn in Hamstead Marshall, Berkshire, whose owners saw electricity bills triple to £17,500 in the most recent quarter. Another business being temporarily shuttered is the Old Churches House hotel in Dunblane, Perthshire. “I will lose less by closing,” said its owner, Alex McKie.
Graeme Smith, managing director of AlixPartners, at least sees glimmers of light at the end of the tunnel. “The situation is more positive than it was four weeks ago,” he said. “Energy costs are coming down, the interest peak has passed and staffing issues are beginning to improve. But the picture is still challenging for the independent sector because they can’t hedge their energy costs and lack the financial headroom to withstand external pressures.”
According to Smith, though, a crisis could benefit some properties. “In a downturn the clientele that remains active can be more choosy, so the better hotels attract a bigger share of shrinking demand,” he said.
The Blakeney Hotel in Holt, Norfolk, is one that is weathering the storm — its bookings are steady and staff who took other jobs during the pandemic have returned to work. But the future remains uncertain. “Rising costs and falling customer confidence doesn’t make the best equation for business,” said its owner, Emma Stannard. “I have no idea what will happen this winter. Will blackouts affect commercial premises? The government hasn’t said they will, but then they haven’t said they won’t. I’ve been waiting to get back to normal since the end of the pandemic, but we’re still working through a catalogue of problems.”
Blakeney Hotel, Norfolk, is weathering the storm
For proprietors of some of the nation’s 35,000 guesthouses, this winter could be “the final straw”, said David Weston of the Bed and Breakfast Association. “The sector is threatened from all sides, and for some small-business owners the headwinds are simply too strong,” he said. “We’re seeing a steady stream of people giving up. Others have taken the view that closing down for the winter to save on energy costs is the most sensible approach. Either way, there will be fewer B&Bs operating next summer than there were this year.”
Last week the £1.3 million Art B&B in Blackpool closed because of a lack of business. The proprietor of a B&B in the Peak District, who asked for her name to be withheld, said: “I’m hanging on by my fingertips. We have four double rooms that have gone up by £10 to £70 a night. That’s £280 a night for three nights a week if we’re lucky — and it still won’t pay the bills. We’re being hammered by energy costs, murdered by Booking.com [fees] and priced out by Airbnb. Sometimes you look at a business model and have to recognise that it’s no longer viable.”
B&B owners walk a tightrope on pricing, said Weston. “If they charge too little they run at a loss, and if they charge too much they lose bookings,” he said. “I’ve been doing this job since 2006 and these are the worst trading conditions I’ve seen.”
The advice for the travelling public is to take nothing in the hospitality industry for granted this winter. Check that restaurants, bars, spas, swimming pools, golf courses and other leisure facilities are open before making reservations. Deal directly with the property where possible, rather than through online booking sites, which charge cash-strapped hotels commission of up to 30 per cent.
Don’t be like the poor Proctor family from Mansfield — who booked a two-night stay in Salisbury through Booking.com and arrived to find the hotel had gone bust a month earlier.
Should the government be doing more to help hotels and B&Bs over winter? Let us know in the comments below
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