When the Autumn Budget 2024 was announced, the impact on the hospitality sector was immediately clear. Rises to National Insurance, the National Minimum Wage, the National Living Wage and business rates will all cost the hospitality sector £3.4bn.
Hoteliers have known of these incoming changes for a few months, but planning an effective plan has been tough. Here’s what hoteliers are saying.
Staffing efficiency is critical
The Budget hits employment costs the hardest, so this is the primary area hoteliers have been looking at.
“[Our hoteliers] have had to take a hard look at recruitment plans for the year ahead as we’re discovering the impact to business, with costs rising by up to £500,000,” said Phillip Allsopp, managing director of Classic British Hotels. “Hoteliers are also looking at whether the operation can be amended to cut staffing costs, and what flexibility can be built in to cope with peaks and troughs in business demand.”
Christina Metcalfe, owner of Downham Hall explained: “We are likely to limit pay rises and hope that we can help our staff through tips and better hours. We have also had conversations about using an older workforce who manage themselves more, as younger team members who need managerial supervision are not as cheap anymore. But this is such a shame for an industry that has so many people having early career employment within it.”
Part time staff could be the key, according to Scot Turner, Founder of Auden Hospitality. “They will soon be the most cost effective team members, as they’ll take longer to get to the threshold for employer contributions to start. We believe that even a 20% shift in full time to part time working can have a big impact.”
The impact of cost savings
Hotel employees work longer shifts than staff in other sectors such as retail, so the hospitality sector is arguably being harder hit than others. “We are a full service hotel, which means…we operate nearly 24 hours,” explained Richard Tyas, general manager of Mount Pleasant Hotel. “That is a considerable amount of manpower. The NI increase without doing anything comes straight from net profit. That – combined with the Living Wage increase – pushes the cost implication to somewhere close to a 10% increase.”
Hoteliers are concerned that changes to staffing levels could impact service, and facilities for guests, such as restaurants, may have shorter opening hours to accommodate reduced staff hours.
“Think like a retailer,” Turner advised. “Look at the space in your hotel and ask how you can unlock any opportunity. We’re seeing some great results in hotels with new offers such as the Wundermart retail stores, which require no manning and add a service amenity to guests.”
Moving forward with hope?
Hospitality is a resilient industry, and hoteliers believe they will find a way through these tricky waters. “This is adversity and we will have to adapt to these cost pressures,” Tyas said. “The hotel team is tasked with saving wastage, payroll where possible… It’s a collective effort.”
There’s also a focus on how technology will be able to help, particularly to support customer service. Allsopp said: “[We’re] looking at how technology can enhance this, as well as automating processes, to help keep rising operating costs under control.” Tyas said that technology with accurate forecasting abilities will become more important in the coming months. He’s particularly interested in “technology with better forecasting of not just sales but manpower costs.” At Downham Hall, Metcalfe says: “Our new CRM will help with more targeted campaigns, and we need to explore more intelligent software for rotas.”
“Over the past few years there has been profound change in the way that we generate demand and provide guest services – all within the context of a restricted labour market,” said Cameron Thomas, Senior Commercial Development Manager for Access Hospitality. “We’ve seen first-hand how our integrated technology solutions have helped independent hotels make efficiencies and save money. This could be a savvy time for hoteliers to ramp up their digitalisation approach.”
Guestline’s 5 tips for managing the Budget challenges
- Match staffing to demand to control costs and forecast revenue with Rotaready.
- Maximise productivity and organise teams and compliance responsibilities with Trail.
- Keep employees skilled-up to efficiently perform their roles with elearning platforms like CPL.
- Ensure F&B profitability by preventing waste while meeting demand with real-time stock updates in Procure Wizard.
- Manage F&B payments and wider billing facilities along with insightful reports with an integrated ePOS.
With Guestline, hotels can plan better, manage better and develop better in response to the Budget. For more information contact Guestline.
