November 2022, Virtual
21 November 2022, Hilton London Metropole
THE UK MEETINGS INDUSTRY is in a systemic decline and may never to return to pre-recession volumes, the Hotel Booking Agents Association (HBAA) has been warned.
Speaking at the organisation's annual forum, hospitality industry consultant Melvin Gold said: "Structurally the conference industry in the UK is in decline because companies' needs for small meeting rooms is in decline. They have more regional offices, so they have more meetings space of their own.
"I am wondering whether the meetings industry is not just suffering from a decline through the recession, but whether they are suffering from something more long-term. As confidence returns, it will pick up - but whether it recovers completely remains to be seen. I am not so sure."
Keynote speaker Gold, former managing director of PKF Hotel Consultancy Services, also warned that hoteliers - and booking agents - will have to face up to a new post-recession reality. "I believe the future of the hotel industry in this country is positive," he said, "but you cannot look at it through rose-tinted glasses. "We are inexorably moving up as an industry. However, I am concerned about public sector cuts, but we don't yet really know the depth of those cuts. They have the potential to cause some choppy waters ahead."
Chancellor George Osborne's October axe-wielding spending review is not the only challenge facing the UK hospitality industry, he stressed. Rises in energy costs, labour shortages, higher food costs, lost telephone revenues and rising taxes - none of which can be controlled by hotel managers - are all having an impact on operating profits.
And lending banks, which have been "relatively patient" with hotel owners up to now, are beginning to turn the screw, even though market volumes have yet to recover fully.
"With the banks leaning on them very heavily, owners are making demands [on hotel managers] that are very difficult to deliver - the customers aren't necessarily there," said Gold. Nevertheless, a conference vote revealed that 62 per cent of the HBAA delegates believe their business will grow by more than 5 per cent over the next 18 months.
If it does, the agents could face higher prices. "I think there is a natural occupancy threshold in each location - across the UK, that's an average of about 70 to 72 per cent," Gold said. "When you reach that, hoteliers feel confident enough to go for rate increases." London hotels have already reached that tipping point, the delegates were told, with occupancy levels now sufficiently high to allow hotel managers to push prices higher.
Outside London, although occupancies are improving, volumes remain to low to permit room rate rises.
"The clouds are clearly passing," Expotel chief executive officer Ian Burnley said during a later conference debate. "However, what has been happening over the past couple of years is likely to result in a few aftershocks. These will create a more uncertain atmosphere than many of us would like to see - the situation remains volatile."
Gold summed up: "The business environment remains tough. We have no choice but to live with the new reality."
THE RECESSION MAY BE EASING, but HBAA chairman Stephen Usher still believes the agency sector will consolidate in the short-term future. "I think there may be some joining-up of agents," he told Buying Business Travel. "Frankly, I am surprised that we haven't lost more, but then many of the smaller ones are owner-operated and they can be flexible. I don't think the number of hotel booking agencies will decrease significantly, but there will be some mergers and acquisitions."