What is your forecast for the next few months?
August has been a relatively strange month as it has been full of mini conflicts with many rural areas reporting bumper activity whilst the major city centres remain very disturbingly quiet. Many are concerned about a second spike yet there is so much evidence of social distancing being breached by the young.
However, there are more and more companies beginning to note that they are seeing a genuine rise of underlying business activity taking place. The overall view, rightly or wrongly, is that London will see the start of new increased activity begin as of the 12th September, as schools will have returned. The latest estimate seems to be that London will see a 25% increase in levels returning to offices.
25% is better than it is today but, of course, still means that a large proportion of workforces will remain working from home which will naturally impact on hotels, venues, restaurants and food service across the capital. It could well be that the hard reality is that things are changing and that all need to adapt to new market conditions.
Listening to thoughts on the future, there are a number of key trends being forecast. Do you agree? What are your own forecasts for what will take place?
· There is a growing belief that the economy will perform stronger than expected and that the UK will experience a mini bounce in Q4, flatten in Q1 (2021) and then move into a recovery stage in Q2 (2021)
· Many suburban hotels will find growth in use and activity by becoming a halfway house for those who neither want to return to the office nor work continuously from home. Many hotels will create “business centre” operations and become stronger community hubs.
· Hotels will need to work harder to become social hubs for their communities and will create new models and services. It is expected that many hotels will seek to outsource much of their culinary production to outside parties, reducing costs in the process.
· Dark kitchens are excellent to see genuine growth over the next year and begin to deliver partnerships with hotel groups with a dark kitchen operator taking over a vacant kitchen within the hotel
· More resort hotels will create new onsite attractions and activities that both keep guests engaged on the grounds plus increase spends.
· Restaurants have overall felt positive about the Government’s “Eat out” scheme and it is clear that there is a desire from many to continue to dine out in numbers but how will the pricing models work?
· There is genuine concern over stadia and events operations as a second spike could well tempt the government to delay their plans to reopen stadiums and for large events to take place. The overall view appears to be that events will start a recovery process as of March 2021.
· International air travel will slowly rebuild but will not return to any strength until mid 2021 and not return to pre pandemic levels for 3-5 years. This potentially is a major concern for the major 5 star London hotels who are become the London homes for International business.
· Technology companies are seeing great strength in their valuations and this is set yet to increase further as the nature of meetings and events does change.
On top of this, experts seem to forecast:
· Office and working patterns are now destined to change and that most offices will become important central hubs to create social interaction and communication. It is expected that numbers will rise to 75% by Q2 2021 but that the majority will only work in offices for 2 days per week.
· Offices will used mostly for team interactions and clients presentations. Day to day work will be done from home.
· Train numbers commuting into London will fall by around 40% on a daily basis.
On the plus side, it is suggested that:
· Companies will naturally work harder at employment engagement and rebuilding trust as this will be vital to the future
· Values and sustainability will once again become core to all strategies
· A new generation of young leaders will be enabled as many baby boomers step back from City life
· Anxiety and stress levels will decline; productivity levels will improve and increase
It is an interesting picture, far from proven but with sound rationale. What do you believe is right?