The hospitality industry is Britain’s third largest private business sector and is predicted to turnover in excess of £100 million in 2018 based on information from the Office of National Statistics. As an industry sector, it is it heavily reliant on a supply of good quality staff, a large percentage of which come from the EU. One in five hospitality managers is reporting that it is far harder to find staff and there is concern that employment quotas will not be reached in the next five years.
As the UK Brexit journey enters the final stage, with nobody any the wiser as the eventual outcome, the hospitality and hotel sector has to face the fact that there is likely to be an unwelcome impact in the form of a shortage of staff and some impressive strategies will have to be developed in order to keep afloat. EU nationals are already returning home and fewer are coming to the UK to take up positions in hotels and restaurants. The unwelcome conclusion is that there may be casualties.
Any organisation that recognises that its survival in the current climate may be uncertain would be wise to plan its next move very carefully. There are a number of cash-rich investment funds on the lookout to enlarge their commercial property portfolios and the UK hotel industry is an attractive proposition Foreign Direct Investment (FDI). Gabriele Giambrone, the managing partner of an international law firm, advises that would be wise to ensure that their advisors have a comprehensive knowledge of the way of doing business in a variety of different countries together with competence in the languages of all parties involved. Gabriele commented “Giambrone has just concluded a complex transaction for an international investment management company based in Germany, providing legal assistance in relation to the high-value acquisition of a luxury hotel. Not only was the actual transaction complicated, but the two parties involved were also very different in their business cultures and it took a great deal of skill on the part of our team to ensure the deal was struck. The investment management company undertakes a reasonably larger number of cross-border purchases during the course of a year, earlier this year they bought a heritage building in Scotland, which had been turned into a hotel, whereas the hotel vendor was a small Italian family business.” It seems that the vendors abruptly changed their position in anticipation of new legislation and took an entrenched position. Fortunately, the team from Giambrone was able to save the situation; their knowledge of family business culture, Italian family businesses in particular, was invaluable. Gabriele said “ in order to prevent the deal stalling or breaking down completely two alternative approaches, taking into account all risks and also taking into account the way Italian family businesses generally operate, were developed by the Giambrone legal team”. Once the preferred approach was selected a robust strategy was devised to bring the project to a successful conclusion, overcoming the obstacles that had arisen and the client’s commercial and financial objectives were fully achieved.
Taking the initiative in a difficult situation can almost inevitably produce a better outcome than being placed in a situation of “no choice”. Paring down a hotel chain or even selling your only hotel may be the route to rising again in more favourable times, whereas trying to hang on in difficult circumstances and losing ground in the shape of poor occupancy and fading maintenance is almost certainly the way to business disaster.
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