Viewpoint: how to ride out the cost of living crisis

12 January 2023
Viewpoint: how to ride out the cost of living crisis

When people are short of cash, hospitality is the first industry to suffer, so let's get back to basics with our offer, says Michael Clitheroe

A ccording to the Office for National Statistics (ONS), around nine in 10 adults in the UK continue to report that their cost of living has increased, equal to around 46 million people – a 27% increase from November 2021.

A larger pool of data was also extracted to examine different actions that are likely to be taken as a result of their cost of living rising. For those who had seen their figures going up, the most common lifestyle change they had made was spending less on non-essentials (57%, around 26 million people).

Naturally, this creates a lot of uncertainty for hoteliers and their customers, whose disposable income has been hacked due to such prolific rising costs. This is an extremely worrying time for the sector as a whole and only stands to destabilise many businesses' medium and long-term viability at an already precarious time following the ramifications of the pandemic. For rural and independent businesses, such as Balmer Lawn hotel, the damage will typically be felt disproportionately, too.

Hospitality, in particular hotels, is often the first sector to go into recession and the last to come out of it. It's the first thing people think about when cutting back on spending and the last thing when they can re-afford. For most people, the behavioural shift goes towards cooking or takeaways rather than eating out or committing to aspirational holidays. Consumers migrate from where they would normally spend their money or not go out at all. As a result, many businesses will see their turnover impacted, their profitability in question, and their long-term prospects of viability in a perilous position.

Additionally, it's important to remember that hoteliers are up against the wall just as much as their consumers. When looking at the cost of living crisis from a business perspective, imagine how much it costs to heat 54 rooms, as well as lobbies, restaurants, kitchens and a spa too. Fuelling a building that was built 200 years ago is a big ask. It's not an understatement to say that such gargantuan costs are likely to impact any remaining profits for countless UK-based businesses for years to come.

Conversely, it's a common misconception that hotels can afford to navigate their way through such financial panic relatively unscathed as a result of being a "luxury hotel", which in turn, leads to cases of opportunists starting to haggle on prices and interpreting price increases as profiteering.

So, as an employer, what exactly can be done to help your staff and encourage guests and visitors to your hotel during unprecedented times of crisis? Well, for a start, any successful business model should always prepare for as much as humanly possible while standing out as an employer of choice. On top of this, it's key to look at how you can incentivise and motivate your staff by being as attractive an employer as possible, which then gives a great platform in terms of retention.

Alongside bonuses, great rates of pay and rewards, an area of focus should always be employees' long-term employment opportunities and upskilling. If they want to reposition themselves with further education, career progression and senior-level salaries, you need to ensure the tools are in place for them to achieve their full potential. With consumers, the key is thinking outside the box and looking at packages that enable them to understand exactly what they're getting for their money. It's about providing a cost-effective experience, but also adapting to understand what people are willing to spend – and this can make a huge difference.

Furthermore, businesses should also be looking towards their sustainability practices, both in terms of steering remaining profit into longer-term sustainability and advising consumers on their credentials wherever possible. The practice of sustainability is no longer a buzzword but a necessity for a business's bottom line, and the fact this will be advising so many more consumers as to where to spend their money shouldn't be ignored.

I'd advise businesses to look at their current business model, too: cut wastage and look at how they can save without affecting the customer experience. It's all about making sure hoteliers are offering the right product, but at the right price – along with staffing to ensure their welfare and pay are in a secure position – to avoid exhausting both the product and the employee.

Overall, my key takeaway would be to consider going back to basics. If there's anything I've learned over the last few years regarding the hospitality industry, it's that its businesses are among the most resilient, innovative and collaborative. That said, my final piece of advice would be to stick together and remain positive as there is always a way to navigate the storm.

Michael Clitheroe is the general manager at Balmer Lawn hotel, Lyndhurst

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