HOSPACE is HOSPA’s annual Conference and Exhibition for hospitality finance, revenue management, IT and commercial professionals, and an event which goes from strength to strength in terms of attendance – clear evidence that the programme and speakers deliver the value that justifies a day or more out of the office. Over 450 attended last week to participate in plenary sessions, workshops, and more.
Industry Overview
Hospace’s opening session featured presentations to set the scene on outcomes from 2015, and what to expect for 2016.
Sarah Duignan from STR Global pointed out that the London hotel market had shown growth out of recession from as far back as September 2010, whilst the regions had only begun to grow as recently as May last year.
On the other hand, whereas London had grown RevPAR by 2.4% so far in 2015 (with 83% occupancy), the Regions had grown by 6.6% overall, making a UK total of 5.2%. Some outstanding results in the regions include Cardiff +17.8% (assisted by the Rugby World Cup), and Glasgow +0.6% on top of the enormous boost provided last year by the Commonwealth Games.
Liz Hall of PwC looked at the prospects for 2016, anticipating continued but slower growth than in 2014 or this year. Influential factors include:
- The mixed global economic outlook, with unevenly spread economic recovery – though UK one of the fastest growing economies in the G7
- Real earnings growth: the first since 2008
- Travel is still a top spending priority, including record inbound revenues, despite strong £ sterling
- Cost conscious mentality remains in some parts
- Impact of potential disruptors and shocks: Airbnb, cyber crime, Brexit…
- Meetings market making slow recovery
- Fewer major events in the UK in 2016
Growth in supply may also impact: increasing numbers of budget hotels, 4 star and serviced apartments coming into the market, providing good choice for consumers, but increased competition.
For 2016, therefore, it looks like slower, marginal growth with occupancy increasing to 77% in the provinces (+0.6%), and 84% in London (+0.3%), whilst RevPAR also keeps growing.
Investment: with the market continuing to be attractive to investors, expect more deals – perhaps even some big ones.
Out of Home Food and Drink
Peter Martin of CGA Peach provided real insight for this audience into what’s happening in the Food and Drink Market, beginning with the observation that, though pubs are closing in record numbers (6,000 in the last five years), new restaurant openings are offsetting this figure – there were 1,300 restaurant net new openings last year.
Despite the economy, the UK now has an ‘eating out’ culture, based upon age and location, not on wealth. The fastest growth is seen in the ‘young’ brands: those with under 25 sites have grown 48% in the last 3 years.
Not just London
The eating out culture is seen in cities across the UK – not just London – as can be seen from the figures for growth in the last year:
- Manchester +4%
- Birmingham +6%
- Glasgow +5%
- London +3%
Other features of this culture:
- Night markets: fun, exciting, attractive to the young, and increasingly organised. London Union expects up to 4 million visitors by 2020.
- Craft beer: only 3% of the market, but growing fast to become the drink of choice for many and attracting new customers.
- The growing cocktail market, and artisan spirits
- The ever-widening range of choice for consumers: ‘kids in a sweetshop’ behaviour, and implications for ‘loyalty’.
But – the market is tougher in 2015, with strong like-for-like sales to achieve. Growth is 1.3% so far, but the number of people going out not increasing. How to stand out, therefore?
- Need to understand and engage and communicate with the under-35’s who embody the eating out culture.
- Utilise technology: these generations employ and expect it
- Utilise mobile and digital: as above, it’s part of life! Note: keep an eye on Starbucks, which is aiming to be best at mobile and digital, and constantly announcing innovations and partnerships.
In summary
A golden age for hotels? Perhaps not: despite the emergence from recession, there are plenty of challenges ahead, including the economic environment, spiralling rent reviews, cyber crime, pipeline of new hotels, and more. On the other hand, the UK’s attraction as a business and leisure destination continues to be strong, with leisure and travel (like eating out) increasingly seen as lifestyle choices that are not readily abandoned or reduced.
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