Hotels: An industry in flux

Posted on 11 April 2022

As we exit one of the most tumultuous periods ever for the global hotels industry, questions about market buoyancy, evolving consumer requirements and innovative approaches to sustainability remain front of mind for those in the sector.  

On 29 March, Mishcon de Reya convened clients and contacts for an in-person seminar – Hotels: An Industry in Flux.

Lewis Cohen chaired a panel discussion with Naomi Heaton (The Other House), James Lohan MBE (Mr and Mrs Smith), and Hugh Taylor OBE (Michels & Taylor) to explore these issues in depth, and we also provided a legal lens on some of the key issues affecting the sector.

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The Mishcon Academy
Hotels – An industry in flux
 

Lewis Cohen, Commercial Partner & Co-Head of Hotels, Mishcon de Reya

We are here tonight as it is a great opportunity to convene our clients and contacts in the hotel sector.  It is a great opportunity to take stock to see what is going on in the marketplace and to crystal ball gaze us over the next period.

How is the hotels market faring?

Hugh Taylor, OBE, Found and CEO of Michels & Taylor

We have had a traumatic few years as you can imagine, in fact in 30 years I have never seen anything like it from a 2019 peak the industry effectively collapsed and the occupancies went down to less than 20% for an entire year which is absolutely extraordinary.

Naomi Heaton, Group Chairman of London Central Portfolio and Founder & CEO of The Other House

The market is very buoyant, it has had a very tough few years but people are coming back with a vengeance and I think that if one can provide and develop a product which is suitable for consumer requirements and consumer lifestyles there is a massive opportunity for the hospitality business going forward.

Hugh Taylor, OBE, Founder and CEO of Michels & Taylor

The industry is doing better, there is a recovery.  It will take about 3 to 4 years from 2019 to get the top line back.  I cannot see yet profitability getting back to previous levels for some time unless and this is the big if, and that is why I am so interested to hear what you have to say, we are creative, we are innovative and we come up with new ideas to look after our customers because the traditional market is changing structurally and we have to adapt to that to make sure that we can be as profitable in the future.

James Lohan, MBE, Co-Founder and Chief Creative Officer of Mr & Mrs Smith

The business hotel as we knew it is over.  I think that trend was starting to accelerate a bit anyway and from a sustainable perspective it is not a bad thing that we are not all jumping on planes and doing snack travel anyway, we want to protect the world if anything’s left hopefully and also financially it makes much more sense to do Zoom calls when appropriate but of course it is also as you say, so lovely to see people in person.

What key trends are we seeing across the hotels sector?

James Lohan, MBE, Co-Founder and Chief Creative Officer of Mr & Mrs Smith

Our consumers are starting to comment about plastic bottles or straws or anything, tiny things, again I thought that was a bit off in your hotel, we’ll let you know.  We are actually starting to feedback some of this information.

Hugh Taylor, OBE, Found and CEO of Michels & Taylor

That’s how it started.

James Lohan, MBE, Co-Founder and Chief Creative Officer of Mr & Mrs Smith

And all those you know, plastic straws isn’t going to save the world, there’s a hell of a lot of other stuff that we can do and we can start to highlight.

Naomi Heaton, Group Chairman of London Central Portfolio and Founder & CEO of The Other House

Whilst we are not seeing a premium for being sustainable in our valuations, what I think that we will begin to see is that there will be an additional risk factor applied by the valuers to valuations if properties aren’t properly sustainable so I think it is going to have an impact and I think it will have an impact amongst lenders and also amongst blue chip investors.

James Lohan, MBE, Co-Founder and Chief Creative Officer of Mr & Mrs Smith

I think we are definitely becoming more sustainably minded.  We are definitely as consumers, looking for experiences that are completely unique to us, that are tailored to us.  We are looking for properties that are going above and beyond our expectations, certainly from our market, from Mr & Mrs Smith’s perspective and I think that often the independent hotel sector drives that so one of the trends that I really love are small hotels being turned into private house hotels almost where you are getting I think the ultimate hotel experiences, not been measuring it by stars or rosettes or diamonds, it’s measuring it by the hosts and all the hostess that are looking after you and the way that the hospitality is being delivered to you in a very personal way.

Andrew Rimmington, Corporate Partner and Co-Head of Hotels, Mishcon de Reya

I think the one take away that I think all parties agree on is the top line revenue growth or the attempt to climb back to that level is going to be you know, hampered by the increasing costs and actually the path to profit is, is going to be much more challenging so I think the ability to follow the money and manage that profit line is the key.

 

The Mishcon de Reya
It’s business.  But it’s personal.

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