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Is it all bad news for independents?

11 July 2016
Is it all bad news for independents?

It can feel like the world is against independent operators, but Roddy Watt, chief executive at the Hotel Management Company, thinks not

The landscape for independent hotel owners and operators is changing at an alarming rate, and much of this change is in areas over which they have little or no control. This can be unnerving and worrying for independents who are often operating in something of a vacuum in that they have little input of a helpful nature about the changes which beset them. It's not all bad news, however.

So what are the main trends that are affecting businesses on a month-to-month basis? It is perhaps easiest to look at these in a number of categories: market forces, economic pressures and environmental impact. One can also, in a very practical sense, look at these as factors as either affecting revenue generation or hitting the profit and loss in the area of operating costs.

Turning first to market forces, the key trend which is impacting all hotel operators is the exceptionally rapid development of alternative accommodation providers, such as Airbnb and aparthotels. Clearly, the apparently unlimited proliferation of budget hotels (some of which are far less ‘budget' then they once were) is also eating away at the traditional market of users of conventional independent hotels.

However, there is still a very large and arguably growing market for high-quality hotel accommodation which offers value and an experience that exceeds guest expectations, whether this be through the delivery of surprise touches, unique services, or through providing an environment in which the guest is able to feel more relaxed and at home than in times gone by.

The other dramatic development is of course the web and the growth of online travel agencies (OTAs) which, on first glance, play to the larger brands' strengths. However, these developments actually hand power to
the independents, who for a small cost are now able to be more competitive, provided they have the knowledge and expertise required in the areas of online marketing, global distribution systems and revenue
management. Sadly, without the knowhow, it is inevitable that independent hotel owners will struggle to be competitive.

In summary, independents must provide an excellent, consistent and perceived good-value product and apply themselves to developing and delivering an effective onand off-line marketing plan. This way, they can be more successful than ever before.

Below the line, there is some bad news. The cost of labour is escalating disproportionately and other cost categories such as energy and, indeed, OTA commissions, can look frightening. But plenty can be done.

At the heart of cost management lies technology, and today, more than ever before, there are very simple and yet sophisticated products that will support the independent in managing everything; from payroll to food and beverage costs. There is also much that can be done to address energy and utilities costs through talking to the right people.

There is no question that the general business environment for the independent operator is becoming more complex and challenging. However, the tools have also developed to enable effective and profitable management despite rapid changes in market and economic forces. As such, far from being a gloomy one, the future holds many opportunities.

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