Subjects: Blowing the frugal bugle, rooms for improvement, being female friendly without trying too hard
Authors: Katherine Doggrell, Glynn Davis, Ann Elliott
Blowing the frugal bugle by Katherine Doggrell
Hospitality businesses are helpful. Hospitable, if you will. They are also businesses. This much should be simple enough for a passing kindergartener to decipher, so no need to bother your local MBA graduate.
These two halves of the whole can rub up against each other in a sparky way when budgets of all types are under pressure. In one corner, you have Bank of England governor Andrew Bailey waving his red flag like something from The Railway Children, asking businesses not to pass on cost increases to customers. In the other three corners, you have cost increases making profits seem like the stuff of fiction.
Customers need to feel like they’re getting value for money, and this is a not an easy story to sell when food price inflation is at 17.4% (June, Office for National Statistics) and it’s no better if you fancy having a lie down after being presented with your bill: STR reported that US hotel rates in May averaged $157.45 a night, up 17% from the same month in 2019, and that’s when you factor in recent supply growth pulling rates down. Anyone currently on holiday can attest that this is a global issue.
So, how can you make people feel happy – hospitable, if you will – about spending their money? Subscriptions is one model that grew in popularity during the pandemic and continues still, the most high-street-prominent of which is Pret. It too suffered from inflation earlier this year, rising from £20 to £30 as it shifted to include a 10% discount on everything sold in-shop as well as five coffees a day.
The hotel sector has been dabbling in subscriptions for significantly longer, although it calls them Soho House memberships, but they both deliver the same result: a regular income stream. The pandemic caused others in the hotel sector to experiment with getting a regular income, most-notably CitizenM, which the rest of the industry tends to look to for its innovation. The group was motivated by the anticipated changes in flexible working, which it forecast would see remote professionals needing somewhere to sleep when they returned to the corporate world for a few days a month – which it could provide for a monthly fee.
Then-chief operating officer Lennert De Jong wrote about “a corporate subscription, targeting remote professionals that need a base in the city to escape to now and then from their apartment for a meeting, a day of work, or a night of sleep”. He said: “What is really below all of this is the desire of a company to have a proposition for mobile citizens of the world that cannot be transacted through the purchase of hotel rooms, but through longer-term partnerships.”
This longer-term partnership is the current aspiration of the sector, and the reason why the current brand launch rate is one every 30 seconds: the old casual dining rate. The theory is that, if they can create a brand for everyone at every age, then they can capture the guest for a lifetime and never need cheat on the precious loyalty programmes.
Accor leapt on this earlier this year with a paid-for Costco-style discount card that delivered a 20% discount at ten of Accor’s luxury and premium hotel brands, and a 15% discount in nine of its midscale and economy brands. In France, the cost was €199/year, which could be recouped as long as you never left the world of Accor. Never ever. Don’t do it, ever.
So, the subscription model is finding its way in via our interest in discounts – and gaining access to that which we might not have otherwise had, ie rooftop pools and a caffeine addiction. But there is room out there to take it further.
As nudge experts will tell you, humans are lazy. They like simple choices. They would like it if you made them for them. How much would you pay to subscribe to all elements of your existence? There’s an argument to be made to suggest that, say, council tax is a subscription to paying for bin collection, albeit one that ends in prison if you don’t pay.
Hospitality is there to make us happy, to ease the sharp edges on our lives. Hotels in particular have the chance to offer more than just beds. They can offer office space, meetings space. Accor had a brief trial of a product that would have allowed you to leave an aged relative in reception and have a team member escort them on a train if you didn’t have time to do it yourself.
The project didn’t gain traction, but they had success offering storage space for motorbike helmets at a hotel next to a motorbike park – with a coffee rolled in. People will pay for a subscription to convenience. And feel happy about it.
Katherine Doggrell is Propel’s editorial advisor and founder of NewDog PR. This article first appeared in Propel Premium, which is sent to Premium subscribers every Friday. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email email@example.com to upgrade your subscription.
Rooms for improvement by Glynn Davis
Crossing Chislehurst Common through the heat haze of early summer (remember late May?), the vision of The Crown came into view like an oasis in the distance. Okay, I’m exaggerating a tad, but it was a very welcome sight, even though we’d only travelled 30 minutes or so from London on South Western Trains.
The pub had recently reopened after a major three-month overhaul at a cost of £1.4m by owners Shepherd Neame, which has brought this impressive property back to its prime. This included upgrading its seven guest rooms, among which are a premium couple at the front with balconies, providing expansive views across the common. This work represents an ongoing investment by the family-owned business in pubs-with-rooms, which includes some particularly beautiful properties on the Kent coast.
Interest in pubs-with-rooms seems to have accelerated post-pandemic as pub companies have increasingly recognised that adding accommodation to their premises can be an important driver of growth. In reality, during these tough times, for many businesses, it is the critical element that makes them viable. Having a major revenue/profit contribution from rooms can now be the determinant between life and death for many boozers.
I’d be surprised if there are any pubs that derive a meaningful contribution from rooms listed among the 223 pubs businesses that entered insolvency in the second quarter of 2023, according to data from Price Bailey, which was the highest quarterly figure in over a decade. It beat the previous record, set in the first quarter.
Adding rooms onto pubs is hardly a new strategy, with Young’s and Fuller’s among the pubcos buying into this approach some years ago, and it is paying off. For one thing, the ability for accommodation to drive food and beverage is a no-brainer. Young’s recently reported total accommodation sales up 73% in its annual results for the year to April 3, during which time it added 59 rooms, and since then it has bulked up by 26 more. To highlight its intent, it has rebranded its accommodation arm to Young’s Rooms.
It is a similar story at Liberation Group, which has accelerated its pubs-with-rooms activity, with more than 400 bedrooms now in its expanding portfolio compared with only 100 pre-pandemic, and it has identified opportunities to add a further 100 rooms within its existing estate of properties.
Jonathan Lawson, chief executive of Liberation Group, says: “We have been particularly encouraged by the strong demand for our accommodation. This is a reflection of our broad appeal for both leisure and business users…we view it as a significant opportunity for growth.”
This has not gone unnoticed by the Heartwood Collection, which was recently rebranded from Brasserie Bar Co, partly driven by a strategy to move into the pubs-with-rooms market. The plan is to expand the estate to 60 pubs, which would include 500 bedrooms, by 2027. It is currently under offer on six sites that involve 150 rooms, which would add to its recent purchase of the White Hart in Lewes, which has 26 bedrooms. This is being funded by an additional £100m committed by its investor owners.
This is all well and good, but what about those pub operators that don’t have the luxury of £100m sitting in their bank accounts, or smaller independents that don’t have the space to add rooms to their existing pubs? Maybe a nearby field is the answer. For country pubs that offered space for campers, the average income amounted to £14,000 for the pitches, and a similar sum was generated from the food and drink consumed in the venue, according to research from Pitchup.com.
The Thames Head Inn near Cirencester is benefiting from just such a move as it last year brought in a healthy £40,000 from its 11 pitches, and around 95% of campers spent money in the pub. Equally impressive is the revenue being generated at food-led pub The Red Lion in Brinkley, Cambridgeshire, where more than 50% of its camping guests spent around £100 in the pub’s bar and restaurant.
Although I personally would take my room-with-a-view at The Crown in Chislehurst over a tent in a field in Cambridgeshire, there is clearly more than one way for pub owners to leverage value from the now-established “staycation” phenomenon and open up some much needed additional revenue streams for their businesses.
Glynn Davis is a leading commentator on retail trends
Being female friendly without trying too hard by Ann Elliott
There is a general low-level buzz of conversation. I can hear talk and laughter behind me. “It’s what I did at Radio One”, one man is saying to another. It’s not distracting, but rather background noise, even though I could hear every word if I really wanted to listen. Now they are joined by two other people and the volume moves up several notches, adding to the vibrancy of the environment.
I have no idea what the background music is, but it’s loud without being too loud. It’s lively without being intrusive. It helps maintain a certain level of convivial conversation without having to strain to listen. It’s just a brilliant atmosphere of warmth and friendliness.
To my left is a table with two women, one in a vivid blue dress talking animatedly, her hands moving excitedly to illustrate the points she is making. The other listens intently. Straight ahead of me is another woman with a laptop open and an excel spreadsheet on the screen – she is on her phone talking to someone over the noise. Lost in thought, occasionally looking out of the window, but otherwise oblivious to the activity around her.
To my right, the server has just accompanied four women to their table, who immediately fall into chatter and catch up. One serves their complimentary water without interrupting their flow of conversation or occasional bursts of laughter. They seem easy in this place. They lean in towards the others. They are focused on connecting with each other and forgetting the outside world for a while.
Next to me, two women start their conversation with “how are you?” in a way which suggests they really do care about the answer. Their interaction with the waitress isn’t lengthy, as if she instinctively knows her role is to help these diners share meaningful conversation for the relatively short time they are here.
My earlier dining companion didn’t want breakfast, but I like breakfast here and persuaded him to join me, so I didn’t have to eat alone while trying to conduct a business conversation. The baked eggs are glorious, but no other place I know serves just a bowl of fresh fruit with banana, grapes, melon, mango, berries and strawberries. We both choose it, and it’s easy to pick at with a fork and carry on talking.
I can only recognise the serving team by their aprons, although not all of them are wearing them, but they all keep their eyes on their tables, picking up the most discreet of signs of customers wanting to order more food or drink or get the bill. Mine smiles as she catches my eye, and it’s a smile that is genuine and engaging. “More tea?” she asks before I have a chance to say anything. It arrives moments later, delivered by another server with huge grin.
The light floods in from the huge windows out to the street, bathing all our tables with subtle sunshine. I feel as if I could work here all afternoon, with my tea being refilled from time to time. No one is nagging me, no one wants my table, and no one is bugging me to leave. I am not sure I really want to enter the real world outside for a while yet, but I have to. I ask for the bill and the server gives me a thumbs up.
Of the 13 customers in my section, six of us are working. As it fills up, there are now 19 customers, of which 15 are women. I know many businesses talk about being female friendly and look to soft furnishings, texture and warm colours to achieve that feel, but this restaurant has none of those. It has concrete floors, plants to divide the space, uniform furniture, tables set with two glasses and knives and forks on serviettes and a semi-industrial feel.
How do they make it feel so comfortable for women to work, eat and socialise here without resorting to the traditional thinking on “female friendly?” Perhaps the fact that this business is run by three women makes the difference.
Ann Elliott (she/her) is a portfolio non-executive director and board advisor