Managing Director Martin Brenig-Jones examines growth in the UK’s hotel industry and applies Lean Six Sigma methodology to demonstrate how hoteliers can avoid a post-Brexit slump.
Martin’s article has been featured in the following publications:
What does the future hold for the UK’s hotel industry? This year’s PwC UK hotel forecast predicts that UK hotels will continue to see further RevPAR growth in 2016, but at a much slower pace.
So, what can hoteliers do to overcome this slowdown?
Although PwC’s forecast is positive, and the UK’s economic performance has been strong throughout the year, there have been a number of external factors causing the slowdown. A lack of large events for UK hoteliers to leverage rates over the summer, coupled with a weak pre-Brexit euro challenged London’s competitiveness for Europeans seeking a city break.
[box style=”rounded”]approaching the EU referendum RevPAR growth was recorded at a high of 2%[/box]
Furthermore, since the Brexit decision, although the hotel sector will face opportunities, the industry must also be prepared for long-term alterations that will arise once the direction of Brexit becomes more apparent. Fluctuation in the market is already evident; European security concerns in 2016 caused UK hotel performance to decline, yet approaching the EU referendum RevPAR growth was recorded at a high of 2%.
Opportunities for the UK hotel sector could also be created as a result of Brexit. Most significantly, a weak pound – dropping to a 31-year low against the Euro, Dollar and other world currencies – has made Britain a more attractive destination for foreign visitors. Hotels outside of London, have also benefited through a resurgence of the ‘staycation’ – British people holidaying in the UK, rather than opting for foreign travel due to the poor exchange rate. The decreased value of the pound also provides the opportunity for increased long-term overseas investment in the UK hotel industry.
[box style=”rounded”]During times of uncertainty it is vital that every organisation define its goals and streamline the processes required to achieve them[/box]
Ultimately, much uncertainty lies around the future of the UK hotel industry, one of the consequences of this is that problems dealt with on a daily basis in ‘fire-fighting mode’ are never tackled at the root-cause. During times of uncertainty it is vital that every organisation define its goals and streamline the processes required to achieve them. When budgets are tight, it is the perfect time to reduce internal waste and improve customer satisfaction.
It is key to continue to offer an outstanding service to ensure that rates, reviews, and re-bookings do not decline.
As little as 10-15% of process steps actually add value in an organisation. Conduct a performance review of internal processes to serve as a baseline to measure future improvements against.
An Improvement Charter is a great starting point to document the purpose and goals of the improvement project, creating an understandable framework that everyone can follow, outlining clear roles and responsibilities.
[box style=”rounded”]It is important to complete this project with a team, enabling key staff to voice their opinion in an open forum[/box]
Three key questions must be asked:
- What needs to be achieved?
- What needs to be resolved?
- How does this affect the customer?
It is important to complete this project within a team, enabling key staff to voice their opinion in an open forum. This document must be concise and simple, providing a helpful template to reference throughout the process.
Once the Charter is agreed, formulate how the work will be deployed, completed, and how the success will be measured. Thinking about how the process links to the customer and their needs will help to determine this.
Heading in the right direction
Develop a ‘storyboard’ summary of the key decisions and outputs to review progress, capturing outputs and findings from the improvement journey to communicate progress within the business.
The what and the why
Data collected throughout the project is crucial in helping hotels to improve processes, generating ideas for possible solutions and then implementing and testing these. Weekly reviews are important to measure progress; hoteliers should evaluate themselves with the following questions:
- What is going well and what is not?
- Will the project achieve its initial goals?
- Is value being added for the customer?
- What conclusions can be drawn?
Take this time to re-evaluate and improve processes that underperform. Do the customers notice an improvement? Can these new improvements be applied elsewhere in the business?
Regard the slowdown in growth being predicted as an opportunity to act now ; improvements made at this time are key to foster and encourage growth. Additionally, with the uncertainty caused by Brexit and the potential implications of the decision being far-reaching for the UK hotel sector; there is a greater incentive for hotels to act efficiently and effectively to ensure competitiveness within the market.