UK: The general election has resulted in a hung parliament which is likely to have both positive and negative effects for the serviced apartment and wider hospitality sectors.
Prime minister Theresa May’s gamble has backfired and the UK snap general election has resulted in a hung parliament, with no party having a clear majority. It is looking as if May will stay on in power but pushing through her policies will be very difficult indeed. The overall picture is one of uncertainty.
There are some potential advantages for the serviced apartment sector and wider hospitality sectors. One of May’s key promises in the election campaign was to deliver a ‘hard Brexit’ with a withdrawal from the European single market and the associated restraint of trade and movement that comes with that. The hospitality sector employs a huge number of EU nationals and a hard Brexit would have meant having to replace many of them, at a time when recruitment is already one of the sector’s biggest issues. A less aggressive stance in the Brexit negotiations could well lead to a reprieve for many of those workers.
And one of the immediate effects of the election result has been a drop in the value of the pound against both the dollar and the euro – this will probably lead to an increase in overseas visitors to the UK, giving the sector a boost.
George Westwell, director of Cheval Residences, said: “The hung parliament has plunged the country into political uncertainty, and it may take days, weeks or months before confidence is restored to the markets. Whilst this uncertainty remains, investment decisions and project rollouts will be delayed which will impact negatively on the serviced apartment sector.”
“Brexit negotiations are likely to become more complicated, and protracted if there is no government with a working majority. The ‘hard’ Brexit will be watered down and options such as leaving the single market and the end of the free movement of workers could end up back on the table again, which will be a positive outcome for the sector if the rights of the European workers in the UK can be secured. The markets where expecting a different outcome, and the subsequent fall in the pound, which may only be short term, will benefit the sector in terms of increased tourism,” added Westwell.
Andrew Hunter, director for Europe at the Toga group – parent company of Adina Apartment Hotels – said: “The UK must find a way to let the world know we’re still open for business. We voted to leave the EU, now we have to work together to make it happen effectively. That means putting politics aside so as not to create more uncertainty. If we don’t do this I feel there will be disruption to the economy.”
Claire Parry, director of Week2Week Serviced Apartments, said: “Again, we are in a time of change and uncertainty. However, our industry continues to go from strength to strength evolving, through challenging times. I believe serviced apartments will continue to be a viable option for travellers and once circumstances within parliament settle, demand will continue, allowing the sector to grow at a steady pace.”
Ufi Ibrahim, chief executive of the British Hospitality Association, said: “The general election result means that we will be faced with the reality of greater and continued political uncertainty in the short term and that is bad for the economy and business. This is the last thing the hospitality and tourism industry needs as we already face a ‘perfect storm’ of issues but the BHA will work with whatever government emerges to see a return to stability and certainty so that we can get on with creating jobs and growth in the economy.”
Piers Brown, CEO of International Hospitality Media, said: “The UK hospitality industry is already demonstrating exceeding resilience to what many describe as the ‘black clouds’ ahead. Despite all the geopolitical tensions and terrorist threats, people are travelling more now than ever and the UK has already seen the benefit. Let’s not forget during the first three months of 2017, London hotels posted the highest average RevPAR for any first quarter on record, according to data from STR, as well as the highest Q1 occupancy since 2010, and record ADR.”
An update on the trading performance of serviced apartments will be presented by STR and HVS as part of next month’s Serviced Apartment Summit 2017, July 12-13, London.
Let us know how you feel about the state of the industry by participating in our European industry sentiment survey – the results will be published on Serviced Apartment News and discussed at the Summit. Click here to take part.
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