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From Torbay king scallops to West Country artisan cheeses and local ales and ciders, guests who dine at Orestone Manor’s renowned restaurant in Devon are in for a treat — but not, now, on Tuesday evenings.
For this family-run hotel and restaurant, as for hospitality businesses throughout Britain, the Covid-19 pandemic has brought a rethink. The global emergency is officially over, but its impact lingers.
In 2022, nervous fears about booking foreign travel gave many British hospitality businesses a bumper holiday season. In contrast, the 2023 summer offers the taste of a new normal — one affected by staff shortages, soaring price inflation and jittery consumer spending.
Yet the experiences of UK hospitality business owners vary widely. While some are struggling to get cash-strapped consumers through their doors at all, others have a clientele for whom quality, not price, is what matters. One challenge unites them however — the difficulty of finding employees.
As the key summer months begin, the British hospitality industry’s current mood is “a tad fragile”, says Patricia Yates, chief executive of national tourism agency Visit Britain/Visit England. Cosmo Gibson, senior policy manager at the Federation of Small Businesses, comments that for this sector “things are looking up but they aren’t brilliant”.
Figures from sector body UKHospitality indicate increases of 18.9 per cent in food prices, 12 per cent in pay and 81 per cent in average energy bills in the year to April. Its analysis finds businesses are raising prices by only 6 to 10 per cent, suggesting margins will be squeezed.
Orestone Manor Hotel and Restaurant, is a four-star, 14-bedroomed boutique hotel near Torquay, where rooms cost from £150 a night for two people. Chef Neil D’allen and his wife Catherine own it; elder son Craig has an 8 per cent stake. His wife Laura works at Orestone and also his brother James, 23, who is also studying at college for a hospitality management degree.
The elegant building was once the home of painter John Callcott Horsley, designer of the first Christmas card and brother-in-law of engineer Isambard Kingdom Brunel.
Craig D’allen, the 36-year-old general manager, is tentatively positive. “In the past three to four years, where everything has been uncertain, you never know what’s happening at a minute’s notice. At the moment, we think we will be all right.”
Staycationers book late
The latest domestic consumer sentiment research by VisitBritain shows 36 per cent of Britons are more likely in the next six months to choose a UK holiday trip than an overseas one, but many are booking late, wanting to save on accommodation, activities and eating out. The rising cost of living, the UK weather and personal finances are cited as the top three barriers to a UK overnight trip.
For inbound tourism, VisitBritain has revised its figures upwards, forecasting 35.1mn visits in 2023 (86 per cent of the 2019 level and 18 per cent higher than in 2022) and a £29.5bn spend (104 per cent of the 2019 level and 14 per cent higher than in 2022). However, it adds the caveat that there is a lot of uncertainty about 2023 “due to the changeable external context”, including the global economy.
This matters economically to the UK; in England alone, tourism employs around 2mn people and, pre-Covid, generated over £100bn in domestic and inbound visitor spending, according to VisitEngland.
Craig D’allen is upbeat about the Orestone Manor’s summer season as a whole as regulars are booking. But he is more cautious about August which hangs on late booking, often from new customers, and is “very weather dependent”.
The social distancing imposed in the pandemic plus subsequent staff shortages led to cuts in the dining room. As well as closing its Bay Restaurant every Tuesday evening and Mondays too for some months of the year, Orestone Manor no longer accepts larger functions.
“We need to not kill the kitchen completely,” explains Craig D’allen. The people this protects include his 60-year-old father, Orestone’s chef patron, and his mother. She became sous chef, shifting from housekeeping and general management, because of staff shortages.
To maintain quality with fewer staff, customer numbers have been reduced. Craig D’allen regrets having to decline functions. “We’d like to be doing more covers than we are.” But this is not all negative; it has meant lower staff overheads and higher spend by customers dining in smaller groups. “It’s cost us turnover, but not so much profit,” he says.
To maintain its reputation, there has been no compromise on ingredients; indeed its emphasis on local sourcing, such as Brixham fish, combined with quick menu changes has helped control costs. Even so, prices have had to rise — food by 15 per cent since October and drinks by 10 per cent. The business, currently employing 11 people plus Craig, Neil and Catherine D’allen, made a modest pre-tax profit in the past financial year on £749,031 turnover; this year is expected to be similar.
A staffing crisis
While the 2016 Brexit vote was followed by the departure of thousands of EU citizens, including many hospitality workers, it is only a partial explanation for the sector’s staff shortages, with vacancies mushrooming by 48 per cent since 2019 to 132,000 on ONS data. The high cost of rented property in holiday locations with the growth of AirBnBs and second homes is a factor.
The premium choice: Anne Gracie Gunn, The Sonas Collection, Skye
On the Isle of Skye, in the grounds of Anne Gracie Gunn’s four-star boutique Duisdale House Hotel, a smart Scandinavian-style building is under construction.
This £500,000 investment is not for guests; it is for the duty managers and chefs she hopes to attract and accommodate to help run the three hotels in her Sonas Collection.
For Gracie Gunn, a hotelier for 20 years on Skye, 2023 is “without a shadow of a doubt” her best. “The top end seems to sell without question,” she says. “There are probably some price-sensitive people but generally speaking at our level we don’t really experience too much of that.”
She is pitching at the right end of the market. In July and August she expects her 56 rooms to hit 100 per cent occupancy. Americans and Europeans will comprise 66 per cent and 20 per cent respectively of guests, paying on average approaching £400 a night per room, plus VAT, for bed and breakfast. The dinner spend adds about £65 a head. British visitors are more frequent in spring and autumn.
VisitScotland figures show visits in 2022 from North America, Scotland’s most important international market, rose by 10 per cent compared with pre-pandemic levels, and spending was up by a full 70 per cent. David Richardson, the FSB’s Highlands and Islands development manager, says the general view is that the 2023 season looks good, again powered by international visitors. Any weakness is in self-catering, predominantly a UK clientele, where some people are shifting from weekly and fortnightly bookings to briefer stays.
Gracie Gunn’s hotels have just undergone a near-£1mn refurbishment; prices this year have consequently risen 15 per cent. With food prices rising “through the roof”, requiring a balance between reduced margins and rising costs, she says. “Profit margin has to come from rooms.” She insists rising food costs must not affect quality or quantity for guests.
The business is comfortably profitable on £6mn a year in turnover. It employs 98 people and Gracie Gunn has just added another 20 with her newly completed £850,000 purchase of a 26-bedroomed hotel at Knipoch, on the mainland, south of Oban. Her daughter and son-in-law are in senior positions in the business and her teenage grandsons help during holidays. Most investment in the business has been internally funded.
All her employees earn above the minimum wage, some substantially so, she says. Brexit has not helped recruitment, she says, but a change in the industry’s image, to boost recruitment, is much needed.
One positive from the Covid pandemic has been a new appreciation of holidays, she says, and of the kind of environment the Scottish highlands and islands offer. “Places that are remote are more attractive: there’s been an awakening to what we have.”
Also, many hospitality workers decided after their Covid break against working long antisocial hours. Craig D’allen observes too that even in a tourism hotspot area like his “younger people aren’t coming into the industry as they were. It’s a lifestyle choice.”
To boost kitchen staffing, Orestone has spent around £2,000 to recruit a Bangladeshi cook who will be trained as a high-end chef under the government’s Worker Sponsor Licence scheme. This gives a work visa, offering employer and employee several years’ security.
Business owners are seeing a new recruitment challenge in that university students home for the summer no longer seem to want the work. “There’s not the same sense of drive,” says Craig D’allen.
As well as hospitality businesses closing more days a week, post-Covid changes include bed-and-breakfast businesses shifting to self-catering in prime spots such as the Lake District.
Hoteliers also have to contend with some customers becoming increasingly ruthless; the FSB’s Gibson has heard of people reserving three or four hotels on booking sites, then at the last minute choosing the sunniest option.
Still, there is, overall, no typical hotel customer. Holidaymakers, says Llandudno hotelier Peter Hibbert, comprise “haves” — “people for whom gas and electricity costs won’t matter” — and “have nots” — people who watch their bank balance before committing.
This reflects the broader divide between those enjoying secure well-paid employment, solid pensions and access to savings, and those scrambling to keep their jobs and to make ends meet.
It helps explain why Hibbert’s low-priced accommodation is facing cancellations while Skye hotelier Anne Gracie Gunn’s upmarket offer, with prices to match, anticipates 100 per cent occupancy this summer.
Family businesses too are a mixed bunch. But they have one common factor — family loyalty. The ultimate example is Peter Hibbert’s 94-year-old father Eric, who works every day, cashing up and doing paperwork. “I just carry on and help as much as I can,” he says.
But one element in British holiday planning remains unchanged — the sun (or its absence). “Weather is a huge driver” when people choose between a domestic and a foreign holiday, says Yates. “The British summer season depends on it being warm weather before the schools break up.” So, if the UK’s family business owners want a forecast of summer prospects, now is the perfect moment to look out of the window.
The budget operator: Peter Hibbert, Evans Hotel. Llandudno
Hotelier Peter Hibbert knows what he can expect from the 2023 holiday season: 14-hour working days, a battle to hire staff and a daily tour of the cheaper supermarkets to keep food costs down.
His hotel, the Evans, is in Llandudno, one of many British coastal resorts which burgeoned as the Victorians discovered the seaside.
The 60-bedroom, self-styled “traditional, honest hotel” has welcomed holidaymakers since 1865, apart from a wartime period when it was earmarked, though ultimately not used, by the security services to hide double agents.
Sixty-year-old Hibbert and his father Eric, still working in the business at 94, bought the Evans in 1989, moving from a hotel in Bournemouth.
Hotels have been Peter Hibbert’s life’s work. But the past two years have brought unprecedented challenges. “Staffing levels are critical. And people haven’t got the money to spend.”
Coach holidays, serving an older, price-sensitive demographic, comprise 90 per cent of the Evans’ trade. Once, this was a solid market. But late booking, a big feature of the 2023 holiday season, is difficult for coach operators who face late cancellation penalties. Where their pre-bookings are low, some operators are cancelling five weeks before the holiday. For Hibbert this means losing 48 guests at a stroke, without compensation.
“It’s half your hotel,” Hibbert says. “We’re in a vicious circle here.” Last year’s overall occupancy averaged 50 per cent, down from 60 per cent pre-Covid.
Some local hotels use online sites like booking.com and offer discounts, even for peak weeks. This, he says, means forgoing 40 per cent of the price. “When people say we’re having a bit of a boom year, it’s not so.”
For £45-£55 a night the Evans’ coach-borne customers, mostly staying four nights, get an en suite room, breakfast, evening meal and entertainment. It has around 25 employees, with a core of 20. Hibbert’s sister, Carol Hardy, 64, does wages and runs housekeeping; his partner Julie Williams works on reception.
Turnover in 2022 was £650,000. Hibbert remarks: “We did make a profit last year — I don’t know how.”
To test the market, the Hibberts recently advertised the hotel for sale, at £2.4mn. No buyer emerged. This year looks tough. Food prices have soared, with staples more than doubling in price. the Evans’ energy price fix has just expired; the new deal is 150 per cent costlier. These rises, plus the minimum wage increase, mean he needs to find £120,000 more this year. He increased prices 10 per cent this year and is preparing for a similar rise in 2024.
Recruitment is a headache. The growth of Airbnb makes rented property too pricey for recruits from outside Llandudno. Some applicants are so poorly educated they can barely read and write. But the biggest issue is getting applicants at all. Social security claimants often fear losing benefits if income thresholds are even briefly broken, he argues. “They are absolutely petrified to work.”
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