The difficulty in forecasting the hotel market

Experts seem capable of making totally wrong predictions time after time. As you know polls grossly overestimated the ‘remain’ campaign’s chances in the EU referendum and also Mrs May’s prospects at the subsequent election. The Bank of England warned us of a recession immediately following a vote to leave, which mercifully did not happen.

Both the stock market and the pound have performed better than many commentators had predicted less than a year ago and there are even questions surrounding the degree to which global temperatures have, or have not, risen since governments entrusted the scientific community with looking into the future.

On this basis only an idiot would try to guess what holds in store for hoteliers in this country. Let me be that idiot right now because I do believe there are several things of which we can be almost certain.

Firstly, bank interest rates will rise again. They have been so very low for so very long and whatever happens in the USA tends to be replicated here, making at least a modest increase virtually inevitable. The direct impact on hotel businesses may not be great, but any movement can of course affect our customers’ behaviour. Let’s face it, hotel stays and meals in restaurants are discretionary luxuries so we really don’t want them to feel poorer.

Secondly, staff will be harder to recruit. The problem is large part a result of having low unemployment, with or without the Brexit effect, and has been building for some years. We are lucky to have lots of great people who champion our industry and talk about the endless opportunities it offers to those who want to acquire skills and make a good living.

Unfortunately the message received among many parents and teachers is that hospitality means low pay and demanding hours, coupled with a perceived lack of status. My personal view is that pay rates are going to be pushed upwards as a simple consequence of supply and demand which will hurt employers at first but will ultimately eradicate the stigma of working at entry level positions in the hotel trade.

Much has already been said on these pages about the looming data protection laws that come into force this spring. We at Pride of Britain and all of our member hotels are busy making the necessary changes to ensure we comply with the new rules and I make no complaint about them. We all want our personal and financial data to be secure. Nonetheless I suspect a large number of hotel businesses will quite inadvertently breach some of the rules and get clobbered with very heavy fines. In some cases these will be enough to put companies out of business.

My third ‘dead cert’, to use a racegoer’s term, is the rapid introduction of Artificial Intelligence (AI) into areas we had not expected. Science fiction writers foresaw driverless cars and drones ages ago but even they must be startled by the ability of algorithms to send adverts electronically for specific products to specific individuals based on their browsing and purchasing behaviour. If you get the chance to read Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari you will begin to grasp the terrifying potential of AI to replace humans in nearly all decision-making, from food production to medical treatments. Never mind robots delivering fresh towels to your bedrooms, they could in time be taking over the management!

My last prediction is based upon what I have witnessed during 40 years in hotels and marketing. No matter what the world throws at hoteliers, their resourcefulness always seems to prevail. I fully expect this to continue in 2018.

Peter Hancock is the chief executive of Pride of Britain Hotels. This feature first appeared in the February 2018 edition of Hotel Owner