Britannia Hotels one to watch?
If you are a destination with one or more of the 61 hotels in the Britannia Hotels group, or indeed a popular destination with major older hotel stock holdings, then the latest results and board statement from the group may be one to watch. Britannia, which if the Which? annual consumer major hotel groups survey is anything to go by are arguably the UK’s least love hotel brand (worst performer for 9 years in a row) have recently posted results for the year ending 31 March 2021.
These results have been picked up by local and regional media as they relate to local hotel holdings. I am not aware of any obvious national comment. Most of that coverage is superficial, some possibly even giving the impression that the results are for what should be the rather better 2021-22 year? The results for 2021-22 will not be posted until this time next year. However, the report while skating over 2021- 22, does make significant reference to expected performance in the current 2022-23 year and, critically I believe, reference to the board’s ongoing tactical and strategic plans for the immediate and longer-term future.
Perhaps not surprisingly given the period covered by the report, the group made a loss of c £9m against a profit for the year ending 31 March 2020 (i.e., mainly the pre pandemic 2019-20 year) of £10.2m. Turnover dropped 68% or c £82m from £120.4m to £38.3m. The average staff head count for the year fell by around 1,000 on the 2019-20 numbers of 2,740. Of these 63 where in central management and office staff and the other 900 odd in frontline staff.
The accounts may not necessarily give a full fine grain picture? We know for example, that during this period (and again in late 2021-22) Britannia were particularly quick to act to reduce costs and, especially staff costs, by closing venues and reducing staff numbers, whilst other groups were perhaps more hesitant and subsequently able (willing?) to make greater use of furlough? We are aware that Britannia were particularly active in using their hotels (and Pontins holiday park) for other covid-19 related accommodation purposes, in some case handing over the venues entirely to be staffed by Home Office and other provider’s contractors as part of their arrangements.
How these measures may have positively or negatively affected the bottom line isn’t immediately clear from the headline figures, nor does it appear to be mentioned in the account’s supporting narrative comment. I would assume that they helped cushion the impacts? Having closed venue and let staff go in 2020 and then reopened for 2021 main season, Britannia were then able, with fewer restrictions and financial penalties again close hotels and let staff go almost overnight, in response to the late 2021 “plan B” reintroduction of some covid-19 restrictions. We will not know the net financial effect on Britannia’s 2021 – 22 year for some time. Reading between the lines of the board comments on the coming 2022-23 year, the group may not be expecting to have returned to profit during the year to 31 March 2022, yet to be reported, and are, like everyone else, facing some strong headwinds for 2022-23.
More interesting for destinations that host Britannia hotels or those with large older hotel stock, who might in future become hosts, are the board’s comments on their strategy for 2022-23 and beyond. Among comments on tight control of cost, competitive pricing and the care and safety for both staff and customers is a potentially telling reference to investment: “Our priority continually remains to maintain occupancy levels and manage operating costs to exploit further investment in new properties”. I read that as a strategy of investment in further acquisitions, rather than a focus on investment in relatively recently acquisitions. I might be wrong, or it could of course be a strategy to invest in both? If I am right, despite difficulties, Britannia are intent on expanding their holding either in existing, or for them, new destinations. Whether that is a good or a bad thing is for others to judge, dependant largely on local circumstances and the desire for a high-volume low-cost accommodation operator.
If you have reason to be interested in the workings of the Britannia group, I would recommend you to scan their Group Strategic Report for the period to 31 March 2021. The meat of the report, which is worth reading in full, can be found on pages 2 and 3. The Companies House filing can be accessed: here.
Various, mainly local media reports can be accessed by Googling Britannia Hotels financial results. Most are fairly superficial and major as much of the group’s performance in the Which? major hotels group survey than they do on the financial performance for 2020- 21. Their relevance I think lies with their ability to stoke a generally poor local perception of Britannia’s local operations and to add to a wider negative national perception of the brand as a whole. This I think may make destination managers’ ability to work closely with the group’s hotels, as they need to do, rather more difficult than it might otherwise be. I can’t help thinking that group’s combined offer is of national significance and that Britannia have sufficient presence in a number of major popular destination to warrant tentative discussions around a combined strategy from those destinations, rather than the current apparently piecemeal approach? I would welcome views.