We don’t like to catastrophise here at NewDog PR. Stick us in Penn Station at 7am on Christmas Eve being told the train we were taking instead of our cancelled ‘plane has also been cancelled and we think ‘oh well, we’ll take the next one and get an $8 latte in the meantime. And some of those Kardashian gummies’.
But we remain fascinated by the Quarter of Reckoning and when it might hit (for more fascination, listen to our podcast here). There was some clarity on this at the Whitebridge New Year summit this week, when Phil Camble, director, Whitebridge Hospitality, looked back over last year’s transactions in Europe and commented that the trend towards distress fell back towards “not a lot”. There had been some distressed deals in the UK, but just small transactions, nothing to make a trend.
Knight Frank also reported on deals this week and commented that: “Despite the anticipation of distressed sales in 2023, the ongoing availability of Home Office contracts continues to provide some hotel owners with attractive short-term income streams, materially affecting the likelihood of certain hotels coming on the market. Knight Frank envisages subdued levels of stock becoming available over the coming year, increasing competition for assets, but anticipates a revival in the number of hotel portfolios being marketed next year.”
Indeed, deals approaching include Generator and no-one could describe them as screaming into their pillows at night. And in the meantime, while the government pursues a migrant programme that is light on sanity and heavy on punishment, there might be takers for beds. And that was before this week’s health secretary started talking about using hotels to store what they think of as bed blockers.
So we find ourselves considering the Quarter of Reckoning and its suitability in 2023. The mood at the Whitebridge event – while delighted by images describing Boris Johnson as getting an arse kicking – was a little strained about the impact on margins of what Hotstats COO Michael Grove described as the ‘repositioning’ of labour, acknowledging that this was a permanent thing, not something we might hope would get better.
And of course it’s worse in the UK because of Brexit – indeed he pointed to data showing that the luxury sector in Paris – not London – was the place to be, because the pandemic had allowed the French to rework their staffing, while it cost a whole lot more in the UK capital.
Nick Pattie, managing director, Whitebridge Hospitality, summed it up with thoughts that wage inflation was “rampant and far higher than is being reported”.
This year, Grove said, would be a year of seeing what happens with costs and how much can be passed on to the customer as we try and improve occupancy. But do get into golf if you can.
All this means that the much promised Roaring Twenties recovery is not as roaring as it could be. If you’re a guest paying the increased rates, it might feel like it, but less so on the other side. We are unlikely to see a Quarter of Reckoning, more likely to see a Year of Surviving. People who are doing Dry January alongside Veganuary are probably already channelling this. We’re still hanging on for steak and champagne.