Express & Star

Brexit blow for hotel chain as EU workers lost

Hotel chain Millennium and Copthorne is blaming a shortage of workers from the European Union due to the approach of Brexit for contributing to its fall in profits.

Published
Last updated
The Copthorne at Brierley Hill was built in 2000 and has 138 en-suite rooms

The hotel chain, which includes the four-star 138-room Copthorne Hotel Merry Hill-Dudley at Level Street, Brierley Hill, reported a 27.9 per cent fall in pre-tax profits to £106m for 2018 on revenue down 1.1 per cent from £1 billion to £997m.

Revenue per room was down 1.21 per cent to £81.57 across the group.

It said that Brexit concerns had affected its UK hotels, particularly in London.

Hotels had started to face difficulties in recruiting EU workers which currently make up more than half of the London workforce.

The minimum wage increase that came into force in the UK last year has further added pressures to the group's increasing labour costs.

Chairman Kwek Leng Beng said: "The hospitality industry faced a range of geo-political and global economic headwinds in 2018, many of which look set to continue in the current year, including US/China trade relations, Brexit and increasing minimum wage levels in many jurisdictions.

"The board's priority is to evaluate and develop new and innovative strategic plans to meet the challenges facing our fast-changing operating environment. The shortage of talent-from rank and file to senior management-is intensifying with many new hotels being built around the world, not to mention the growth of Airbnb and serviced apartments.

"Any hospitality business that wants to progress will need to evolve and embrace these changes to stay relevant and profitable in the immediate and medium term."

He added that 2019 would be another challenging year for the group, with significant capital projects underway and several large hotels earmarked for major renovations.

The shortage of EU workers is affecting hotels big and small.

Willem Vlok, of Old Downton Lodge in Ludlow, said: "This is a big problem and we are struggling to employ the right people. Unfortunately we do not have enough local talent that wants to work in hospitality in the UK.

"We currently have two vacancies. What I am hearing and I can't confirm if this is true or not but European nationals think UK does not want them to come and work in the UK. Also with the weak pound it is not so attractive to leave your home country and come work in a foreign country."

Travelodge, which has hotels across the region, is also preparing for post-Brexit Britain, and last month launched a new recruitment programme targeting mums and dads looking to get back into work by offering jobs with hours that fit around the school run, a work buddy and access to management training.

This programme is designed to help attract some of the UK’s two million plus unemployed parents into hospitality, as part of Travelodge’s plans to open 100 hotels over the next five years, which will create up to 3,000 new jobs.

Peter Gowers, Travelodge, chief executive said: “We are preparing in earnest for post-Brexit Britain. With thousands of new jobs to fill, we need more new colleagues than ever. We see vast untapped potential in parents who want to return to work."

Jimmy Donaghey, professor of international human resource management at Warwick Business School, said: "More businesses are likely to face similar problems after Brexit. Tougher restrictions on entry to the UK could create a huge labour shortage, especially of unskilled and semi-skilled workers.

"It is hard to envisage how radically scaling back immigration will not lead to severe labour shortages, particularly in the retail, restaurant, and hotel sectors given how they depend on migrant labour.

"This is likely to hit the South East hardest. Nearly 40 per cent of all immigrants now live in the capital, making up 38 per cent of the capital’s population.

"It will be difficult for unemployed or unskilled British workers to fill those jobs, as many available workers are concentrated in economically depress parts of northern England, Scotland, and Wales.

"There are huge barriers to those low-skilled, low-paid workers relocating to the South East, particularly the prohibitively high cost of buying or renting property, especially if they have families.

"We have already seen the number of migrants arriving from eastern Europe fall for the first time since those countries joined the EU. Yet the UK economy has continued to rely on migrant labour."

For the fourth quarter of 2018, pre-tax profits dropped 75.9 per cent to £7m for the Millennium and Copthorne group, which also has a Copthorne at Paradise Circus in Birmingham city centre, although revenue rose 3.7 per cent to £267m.

Revenue per available room in London dropped 7.4 per cent, partly due to the closure of its Mayfair hotel for refurbishment.

The group bought an alternative site in Birmingham in December to develop a new 250-room hotel which will replace the Copthorne Hotel Birmingham.

It had been in talks with Birmingham City Council and the developer of Birmingham's Paradise Circus redevelopment scheme, known as Paradise Birmingham, as a result of a compulsory purchase order by Birmingham City Council that covered the Copthorne Hotel Birmingham and other properties in its vicinity.