How Hotel Industry Can Tackle The Upcoming Energy and Staffing Crisis

By Lionel Benjamin, Co-founder AGO Hotels (www.agohotels.co.uk)

The research released recently by Barclays Corporate Banking, demonstrated the hospitality industry could grow by £7.3bn this summer which is a positive indication of how consumer demand and confidence in the market is potentially building, following the pandemic.

This comes at a time when hotels are facing many other challenges too. With rising inflation and the cost-of-living increasing daily, hospitality businesses continue to feel the pinch. Room rates are competitive, inflation is impacting costs and the combination is eroding profits.

At AGO, we are promoting staycations, fostering talent, and working with experts to address some of the challenges we are facing.

Focus on staycation and guest satisfaction rates
Over the last month we have seen a plethora of cancelled flights, with more being announced virtually daily. There is widespread general airport chaos with the threat of strike action, leading many Brits to cut their losses and look to holiday closer to home. A similar pattern of airport chaos is being reported around the world. Across our portfolio of 14 hotels in England, Scotland and Wales, bookings for both May and June were up on the same time last year, suggesting an uplift in family and leisure bookings. While we do not predict the corporate traveller will be back to staying in hotels as they were pre-pandemic, though the industrial corporate traveller is out and about and continues to have bedroom requirements.

For hoteliers with properties close to tourist and holiday hotspots, it is essential to provide attractive deals for those looking for a British staycation. At present, and likely for some time, many people are going to be conscious of their spend, so affordable and convenient accommodation is key when competing for bookings.

Of course, from booking to check out it is important guests enjoy a straightforward positive experience and hoteliers need to carefully consider how they maximise the guest experience, whether it is through ease of booking, seamless check-in and of course providing the best sleep experience. Value for money being critical to the guest!

Support our team members
The Barclays research highlighted the difficulties the industry is continuing to experience around recruitment and retention too. Hoteliers must creatively find solutions and as a priority implement measures to retain team members.

Training and development opportunities, openness to flexible scheduling and reviewing the benefit scheme offered are focus areas for hoteliers to invest in to retain employees, in tandem competitive scales of pay. Ultimately, we need to value team members as without them we have no business, and with the right team, the right people, and the right attitude so much can be delivered to the guest and the profitability of the business.

Optimising costs
Like businesses across any sector, growing inflation has resulted in hotel companies facing increased costs. When it comes to soaring energy bills, we believe businesses should appoint a specialist broker or advisor to ensure they are achieving the best possible pricing. Not only will this pay dividends in the long run but with growing ancillary charges – aside from the unit cost – expert advice can really add value. This is especially true in the present market, and we’d advise doing this before the upcoming October price review.

Companies – who were cautious – agreed three-year fixed pricing and now have a safety net regardless of how utility charges escalate. Undoubtedly suppliers will try and recoup losses and for new contracts terms will be very different.

Utilities are one example, though there are procurement opportunities across the entire basket of goods and services. Buying through or with consortia and brand can deliver competitive pricing. digitalisation of working practices and use of technology has proved to optimise costs and delivers medium to long term ROI.

Government and council grants are still available, and again, are an area where expert advice can add value.

Overall, challenges surrounding costs are showing no sign of easing and now more than ever hoteliers must look at their current business and adapt to fit the ever-changing industry landscape. Hopefully, doing this whilst maintaining strong and engaged team members will result in the successful summer season which some are predicting.