In it for the money 

The hotel sector tends to think of itself as a calling. This has been very handy when it comes to underpaying teams, because if working nasty hours doing not fun things can be called a calling then you’re all set. See the NHS for further details.

It turns out that staying up until 1am wondering whether the lone drunk at the bar was going to have another Scotch/eat every last nut in the building/fall off his stool isn’t, of itself, rewarding enough and wages have become an even greater part of the not-so-mouthwatering cost pie. 

As we noted a couple of weeks ago, something else which has increased, at least in the UK, is the government’s use of hotels, in this case less for stranded MPs and more for asylum seekers. 

At the end of September 2022, there were 100,547 individuals in the asylum system who were in receipt of support, 46% higher than at the end of September 2021. Of those 95% were in receipt of support in the form of accommodation and subsistence (what the rest of us might call ‘cash’), the remainder just subsistence. The increase was caused by a post-Brexit increase in people in the system and an increase in the time it is taking to process claims. 

Enter the hotel sector. The Home Office has contracts with private sector providers to source accommodation on its behalf. This used to be what the Home Office called “hostel-style ‘initial accommodation’” but this is now full and accommodation providers have been block-booking hotels to house asylum seekers.

But, before you start retweeting Nigel Farage’s videos where he creeps into hotel reception areas and starts ranting about about how asylum seekers are up to their manicured nails in spa treatments and yoga sessions – we paraphrase – becoming an asylum hotel means that you are sending your spa specialists home. 

Hotels taking on the contracts are typically at the budget end, rooms only, and are closed to the general public. There are no meetings rooms for hire, no weddings and, sorry Nige, but no hot stones. 

Close to 400 hotels are being used to house asylum seekers, as arrivals to the UK rose last year. The BBC reported that one booking agency used by the Home Office trebled its pre-tax profits from £2.1m to £6.3m in the 12 months up to February 2022. And it’s not just the booking agencies. The hotel owners are also quite keen on regular money at a rate we can all enjoy. And 100% occupancy. And without having to pay someone to hand out peanuts at 1am. 

Which takes us back to hotels being a calling. Surely one owns a hotel so that one can spend evenings polishing glasses and dispensing wisdom at the bar? Finding that lost teddy bear so that a guest can get a good night’s sleep? Delivering the perfect poached egg at breakfast, fifteenth time’s a charm?

Not so much. Taking a Home Office contract is a way of making money. You are still a hotel. Increasingly, if you buy a hotel, the chances are that you’ve done so for the money. Be you pension fund, family office or Lottery winner. Of course there are those who are buying hotels as vanity projects and might blow the budget on funny lighting or working wifi, but, as the sector has found itself growing into being a mainstream asset class, owners want money for their investment.

This passion for making money is creeping into all areas of the sector, not least a growing enthusiasm for asset management and transparency in brand agreements. We see it in the new brand standards which no longer require ballrooms. We see it in operators having to explain their fees. We see it in the growth of serviced apartments with limber operations. We see it in technology contracts which deliver more revenue, not just a toy for someone in marketing to play with. 

One doesn’t want to be totally avaricious of course. Hotels ARE a calling. There are, we hear, ways to make money which don’t involve any contact with the outside world at all. But when you look at what the sector has achieved in the past decade, the innovations and the excitement we are seeing, you have to wonder whether the pursuit of money is all bad, after all. 

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