Hotelier with views

Todays i’ll explore the different types of business demand that Hotels in the UK experience and how that impacts on their respective business model. Whilst there are many different styles of Hotel offering a wide range of service styles, I’ll be taking a look only at the business demand.

In the UK there are mainly two types of Hotel demand, Seasonal and Flat-line models. This is largely dependant on geographical location and i’ll touch on that shortly. The differences have a significant impact on how the business can operate, most of which goes unseen by the general public and can at times be a negative influence on the hotel sector, especially recruitment.

Flat-line demand represents a constant across the year regardless of month, yes there will be micro changes impacted by local or regional events however, in the main the flatline model is what is experienced at city centre, airport and some Honeypot locations. For these locations, occupancy levels remain at a high percentage per month with littl deflection from that.

The other flat-line demand model can be applied to budget chains such as Travelodge or Premier Inn where they retain an average high occupancy percentage at the expense of average room rate.

My main focus here though is the Seasonal demand operation, where Peeks and Troughs dominate the year, the summer / warmer months producing the high peeks of demand and the toughs seen during the winter months, especially November, January and February. On a graph this represents a Roller Coaster, with the highs and lows and the occassional bump in the lows, usually at Christmas.

Morecambe is no expection here and for decades has been a seasonal holiday town, catering for tourists during the May to October months and then reliant on business or low value group accommodation during the winter period, also known as the closed season for obvious reasons.

The challenges of the Roller Coaster are two fold, firstly there is staff recruitment and retention, then there is the challenge to earn during months where demand is high to offset the losses in the months where the demand is low.

So lets look at recruitment – a challenge in the current climate with over 300,000 fewer transient workers each year due to exiting the EU making it increasingly more difficult for European backpackers to come over and work a season. There is also a smaller impact from COVID which affects the Australian & New Zeland transient worker market, however this is minor when compared to the European quantities. So we turn to the local market which is where the first issue arises. With increased demand for UK workers in al sectors, hospitality has taken a significant hit in it’s ability to recruit, seen as a low paid, low skilled job with few career prospects it is more often looked down upon by theose of UK workforce age or even career advisors. Whilst the pay can be lower than other sectors, the skiils required and career prospects are actually far higher than most percieve.

In economics supply and demand go hand in hand so you’d like to think that with shortage of supply (workforce) that remuneration will increase to attract the fewer willing jobseekers to enage with the process, however this hasn’t been seen. Some employers in Hospitality have offered significant higher salaries only to find that the caliber of candidates isn’t where they’d expect, many staying with existing employers or having moved out of the industry during COVID have decided to stay out of the industry.

All of this makes recruitment more challenging as the roller coaster rises to the top of it’s peek, the closer it gets, the higher the number of work force are needed. Lets say now though that the Hotel has managed to recruit all of the positions and they’re at the top of the peek, here comes the next challenge, retaining those workers, as demand slows, the number of hours on offer also drops to the point where the worker is then left seeking alternative employment as they, rightly so, need to ensure they have sufficient income to keep the roof over their heads and their bills paid.

This comes to a head during the depth of winter where the demand for accommodation is at it’s lowest so the businesses are unable to offer work to their team who they recruited only 6 months prior. The staff then move on and the whole process starts to repeat itself in only a matter of 6-8 weeks time.

This has been the same case for decades and for the foreseeable future is will remain the same, meaning seasonal businesses have to go through the pain every year of recruiting staf fonly to then have no work to offer them in a short period of time. Can this model be broken? Will it ever evolve? I’ll look at covering this in my next blog.