Recruitment freeze and rate cuts loom

Recruitment freezes and savage rate cuts are among the measures hospitality businesses are being forced to take to cope with tough trading conditions.

A Manpower survey published this week has revealed a dramatic drop in the number of staff that hotels and restaurants intend to take on during the next quarter (March to June). Just 16% of hotels and restaurant employers said they planned to recruit staff in the second quarter of the year. This compares with 17% last quarter and 31% in the same period last year.

Unions are hopeful, however, that most companies will find ways to avoid making redundancies. "In London a high proportion of workers are from overseas and, where extended leave has been refused in the past, they might find employers will allow unpaid leave this year," said David Turnbull, regional organiser for the T&G union.

David Michels, chief executive of the Hilton Group, said that, while some jobs needed to be replaced, the company had effectively imposed a recruitment freeze.

"It's our objective to keep people but we're arranging staffing through attrition or letting people take as many holidays as possible," he said.

Last week it emerged that Millennium Hotels and Resorts had issued warnings to staff of cutbacks which could include four-day working weeks.

Rate-cutting is also becoming a necessity, particularly in London, where occupancy has been hit the hardest. Accountant Steven Lum from North Gower Hotel Management, looks after four central London hotels.

"We've been ringing round the agents and travel groups and they are demanding a big percentage. On top of that we are having to discount up to 45%," he said.

And at the 36-bedroom Delmere hotel close to Hyde Park, general manager Ruben Coonen said he was prepared to discount up to 50%.

Hoteliers are trying other measures to make the most of tough times. Peter Eyles, executive chairman of hotel group Hanover International, said improvements to food and the introduction of comedy nights were proving successful in boosting local trade. "We knew this year was going to be very tough and not a recovery year. Improvements are starting to pay off," he said.

While demand is low, Le Méridien is ploughing ahead with a £250m revamp programme delayed for nine months after 11 September, most of it in its London properties.

And if the going gets tougher…

The British Hospitality Association has held preliminary talks with the Government over possible aid for hospitality businesses should the financial situation deteriorate.

During the foot-and-mouth crisis it negotiated various schemes where businesses that were particularly hard hit were able to avoid paying VAT and interest rates.

"We've had preliminary discussions for a similar plan but I'm not sure whether the situation will come to that stage," said deputy chief executive Martin Couchman.

Over to you…

Roddy Watt, chief executive of Berkeley Scott, explains why retaining quality staff is so important
The current climate of uncertainty and accompanying difficult trading conditions across our industry are leading many operators and suppliers into laying off large numbers of good people in a knee-jerk reaction aimed at cutting margins and minimising their cost base.

Companies that downsize their staff as a first option are guilty of rushing into a short-term panacea.

Instead, they should consider alternatives that would allow them to retain intact good teams of people that have been successfully built up over the previous years.

The longer-term benefits derived from implementing alternative money-saving strategies, such as offering staff reduced working hours, voluntary sabbaticals or straightforward operational cost savings, can be considerable.

It should be emphasised that, even in a short-term economic downturn, the lifeblood of a service industry such as ours is its people. To lay off talented, good quality staff is dangerously short-sighted since, when the upturn comes, these depleted companies, which have reduced their staff both in numbers and in morale, will be at a serious disadvantage when it comes to maximising the very real possibilities of such a situation.

Many good people could be lost to the industry forever and tempted into other sectors perceived as more stable and better remunerated.

Given the already chronic skills shortage, this cannot be a desirable outcome - particularly in a week when the industry is supporting the Springboard Careers Festival designed to promote the industry as a career of first choice.

Source: Caterer & Hotelkeeper magazine, 3 - 9 April 2003