The continuing lack of an agreement ahead of the UK’s planned exit from the EU in March has meant a sector under growing strain.
As the likely timing of a deal moves further and further away, issues of staffing, costs of imports and fears over future travel were foremost.
Jane Pendlebury, CEO, Hospa, told Hotel Analyst: “The majority of people employed in hospitality across the UK and especially in the South East, have suffered from confusion around Brexit since the referendum. Since the leave vote was confirmed in June 2016, hotel GMs have been inundated with queries from European nationals bewildered by the potential impact and concerned for their jobs. The weakening of the pound has added to the disillusionment of so many of our overseas workers. As an industry that relies on foreign staff – there are literally not enough UK-based people to fill these hospitality roles – this continued uncertainty and delay is adding additional strain.
“My own view is that the vast majority of people voting were not sufficiently informed of the consequences of leaving the European Union, and the Remain campaign was dangerously weak, lacking in any substance. The protracted negotiations have only served to validate the opinions of those that perceived the European representatives as ‘difficult’ and ‘arrogant’ so even if there were to be another vote, I would worry that the result may not change. However, a weakening economy is not good for our industry and most other businesses across the country. Maybe that message is beginning to filter through. Perhaps a visit back to the drawing board is the right route – at the risk of civil unrest.
“More and more hotels are now outsourcing their housekeeping function because that seems to be the best way to source staff in a department where few British people aspire to be employed. Goodness knows how the agencies will continue meet their contractural commitments.”
Professor Chris Cowls, CEO, Eproductive, told us: “Working with my colleague, Professor Andrew Lockwood, at the University of Surrey’s School of Hospitality & Tourism Management, we have been tracking the impact of Brexit on hotel staffing since 2015, the year before the 2016 referendum.
“We are grateful that several of my company’s hotel group clients have allowed us to anonymously analyse their data. We have looked at where staff come from in three categories – EU countries, the UK and rest of the world. For the first time this year we have seen a marked decrease of 7% in the percentage of staff from EU countries. Even with this decline the hotel groups still rely heavily on EU employees for nearly one third of hours worked. Replacing them will be difficult – with the additional challenge of greater work flexibility by EU staff”.
The report also analysed sources of staff by contract type and department, with results showing that EU staff worked more flexibly than staff from the UK and the rest of the world. Around 30% of contracts with EU staff were casual, with 69% on permanent contracts and the remainder fixed terms.
Meanwhile, ABTA has issued guidance to travel companies and consumers ahead of March next year in the case of a no-deal Brexit. The organisation’s advice included checking passport expiry dates to ensure six months remained, having adequate travel insurance, including medical cover and applying for an international driving permit.
Abta CEO Mark Tanzer said: “Given the ongoing uncertainty it is advisable that members continue with contingency planning in order to make sure you are prepared, whatever the scenario. There is still a way to go before the industry has the much-needed certainty about what will happen after 29 March next year.”
One property agent, who declined to be identified, said that several deals had fallen through in recent weeks, with Brexit being blamed, adding that the past week had seen a standstill in the market as investors waited to see which way the country would be proceeding. Past March, they remained confident in the attractiveness of the UK to investors, but warned that any issues around visas could harm that.
The European Commission has proposed that British travellers should not require visas across Europe after leaving the EU, provided that the UK offers the same to EU nationals. Under the proposal, UK citizens would not need a visa when travelling to the Schengen area for stays of up to 90 days in any 180-day period if the UK leaves the EU on of March 29 without a deal in place.
If a Brexit deal is reached this would apply as of the end of the transition period, as outlined in the Withdrawal Agreement.
The European Commission said: “This proposal is entirely conditional upon the UK also granting reciprocal and non-discriminatory visa-free travel for all EU Member States, in line with the principle of visa reciprocity.”
HA Perspective [by Katherine Doggrell]: It was never made clear what ‘Brexit’ was, with that lack of clarity the cause of much of the inability to agree a deal. What is clear is that Brexit currently means chaos and no matter how loudly people, businesses and all points inbetween bellow about the need for some certainty, the government is too busy eating itself in its quest for, well, who knows what at this point, that the needs of the people have been cast aside in favour of delivering what their will demanded. Whatever that was.
Labour, meanwhile, couldn’t oppose anything even if they were entirely made of mirrors. The market is concerned about the potential Corbyn government, but any party which can’t wrest control from the current incumbents is unlikely to gain or retain power.
Prior to the current swirling vortex of disaster, many in the hospitality sector had lent their support to the deal which was due to have been voted on last week. Not because it was a spiffy deal, but because a deal, any deal, was what was required.
Short of suggesting that all Tory MPs get the chance to be PM for a day, there seems no way to tranquilise the Conservative Party and agree a deal. Start looking for a contingency plan under that Christmas tree.
Additional comment [by Andrew Sangster]: There are already far too many trees (or their digital equivalents) which have been chopped down in the name of Brexit commentary to make it worthwhile for Hotel Analyst to engage in a discussion of the wider impact.
It is worth making the point that as a newspaper we opposed leaving the EU on the grounds that the disruption caused was always likely to be more than any potential gains once a steady state had been reached on exit (and we fully expected there to be a net loss at this point – albeit nowhere near as bad as some have been forecasting).
Once the British people voted to leave we have consistently supported efforts to reconcile the different sides of the debate and find a way forward that was the least disruptive. A perfect solution does not exist and comprises had to be made. This was the job of the politicians. It has been an epic fail.
The rancorous debate in the UK was poor before the June 2016 referendum and has not improved since. Both sides have been guilty of distortion, exaggeration and on occasion outright lies. Both sides, both Remain and Leave, have been more interested in continuing to fight each other than to find a way forward for the country.
For the UK hospitality industry, the period post-Brexit has been mixed. Broadly, the top line has been better than expected but the bottom line has suffered.
Driving the strong sales performance has been the increase in demand from a significantly more competitive tourism product in international markets. The decline in the value of Sterling, somewhere in the region of 15% to 20% lower, has brought more foreign tourists to the UK.
On top of this, the UK economy has proved robust, outperforming most other large industrialised economies in the first year post-Brexit vote and even today growing faster than the Eurozone average. This domestic economic strength has helped the UK hotel industry look to be in reasonable health despite the significant surge in supply that has occurred in London and some other big UK cities.
Not so good, however, has been the rising cost of labour, which is the flip side of the sales uplift from the currency decline. Hotel operators have reported a much tighter labour market and higher payroll costs. Not all of this is down to the Brexit vote – the introduction of the National Living Wage and pension enrolment has been a big factor, possibly bigger, in terms of costs although the tightening of the labour market is mostly Brexit related.
The issue of just how poor the quality of debate has been is what is really aggravating right now as the UK takes itself and the rest of the EU into one of the biggest political crises in generations.
The unreality is marked by the ludicrous nature of much of what is discussed. An example is the wholly unwarranted focus that has been placed on the fishing industry. This tiny, irrelevant, no-growth industry has garnered a huge share of politicians’ airtime.
The UK had 11,692 fishermen at the end of 2017 and they landed GBP980m worth of fish. The UK hospitality industry employs 3.2 million people and contributed GBP72bn in gross value added to the UK economy last year.
Only if you take a tiny geographic area – say a small fishing village on the Scottish coast – will fishing be more important to a local population’s economic prospects than hospitality. And even for the inhabitants of that village, their overall welfare will be vastly improved by a government focused on doing no harm to the hospitality industry rather than a government obsessing about fishing.
The lack of a balanced overall perspective by politicians both in the UK and within the rest of the EU is damaging the entire debate. As we head into the last three months before the exit deadline, it has to be hoped that this changes. I’m not holding my breath.