On the eve of discovery
Hospitality's traditional bleak trading period during January may feel even flatter this year after the months of greed-fuelled hype that surrounded the millennium celebrations.
As many had feared in the run-up to Millennium Eve, the night failed to provide a cash bonanza. Just days before the big event, many hotels and restaurants that had earlier in the year thought they would be sold out were still scrabbling to fill vacancies. The public shunned inflated prices and instead stayed at home, attended private parties or took to the streets with their own Champagne and beer.
Operators who decided that they would close for the night may be well be feeling a little smug. But high-profile hotels which chose to hike their prices and impose conditions of several nights' bookings argue it was not greed that forced up the prices.
"It was so hyped by the media years in advance," said Patrick Elsmie, operations director of Gleneagles hotel, Auchterarder. "The difficulty in pricing was the potential cost of the personnel and the entertainment."
Fees for bands, entertainment and hiring of marquees doubled compared with the previous year for Gleneagles. Although the hotel ended up with about 30 unfilled places for its four-night package at £2,000 per person, Elsmie said the event had made the hotel money, but would not disclose how much.
Sir Rocco Forte's Balmoral hotel in Edinburgh caused a stir when it announced a millennium package of £8,500 per couple early last year. "It probably assisted in the acceleration of the hype," said Enda Mullin, general manager of the nearby Caledonian hotel.
By May, however, the Balmoral had slashed the price by one-third because of lack of bookings. Last-minute reservations gave it 100% occupancy, but only after cheaper alternative packages were introduced. "We made a profit, but not as much as we had hoped. We didn't make a huge amount out of the more expensive packages because of the costs of entertainment and gifts," said commercial director Richard Power.
Fears that staff would demand ridiculous fees turned out to be unfounded. In fact, it was employers calling the shots, in most instances paying three times the going rate. "It never came to demands. We told them it would be double and triple time and a bonus, which was by no means excessive," said Mullin.
Many restaurants, such as Manchester's Reform, cancelled their New Year's Eve celebrations because they attracted so few bookings. Of those which braved it out, some found it worthwhile, such as Conran's Mezzo. The London restaurant still had one-third of its 350 seats to fill just days before the event but eventually succeeded in selling out without cutting its fixed price of £235 per head.
It was a night of mixed fortunes for pubs, with those charging reasonable entrance fees mopping up the crowds in city centres. Hasty revisions had to be made to ticket prices in many cases when it became clear people were not going to pay high prices for a night in a pub.
"Some came unstuck by charging big money, just like with the eclipse in Cornwall," said Tony Payne, chief executive of the Federation of Licensed Victuallers Association (FLVA).
"One village pub had more than £5,000-worth of stock left the day after, which creates a serious cash-flow problem," he added.
More serious is feedback from FLVA members indicating that more pubs could face bankruptcy this year after poor trading on New Year's Eve coupled with fewer Christmas party bookings and slower-than-usual January trading.
So are there any lessons to be learned from the experience? "If a situation is hyped that far in advance and you take notice of it, you run the risk of ruining the business," said Elsmie.
Mullin at the Caledonian added: "With every event, people want to think they are getting value for money."
If there is one lesson for the hospitality business from both Millennium Eve and the eclipse in 1999, it is that a huge rise in prices for a single event is not going to attract guests: it's going to drive them away.
