“Our hearts go out to everyone affected by the Russia-Ukraine conflict,” says Tim Hentschel, CEO of HotelPlanner. In its latest market recovery report , STR writes “we don’t believe will be a deterrent for travel… as individuals rush to enjoy a sense of normalcy”. Historical analysis from STR about rising gas prices show little impact on US hotel demand. Consumer sentiment to travel is understood to be delicate, though cautiously optimistic. Operating costs might be high but revenue forecasts are healthy – even in spite of OTAs such as Expedia ceasing trips to and from Russia. Whilst the hospitality sector faces some serious headwinds, the long-term travel tailwinds are strong. A survey by UKHospitality reveals that 93 per cent of 340 operators intend to increase prices by an average of 11 per cent this year. Advice includes forward purchasing energy where prices are still acceptable, as well as implementing effective monitoring solutions to track consumption and inform behavioural changes.Īs operational costs climb, hospitality businesses may have no choice but to pass prices on to the customer. How to manage rising cost pressures is explored in the latest feature from Boutique Hotel News. It’s an incredibly energy-intensive industry and steps have been taken over the past few years to transition to a circular, more sustainable, net zero carbon strategy. The wider hospitality sector accounts for two per cent of the five per cent global CO2 emitted by the tourism sector. “As huge consumers of energy, this spike in energy costs will put extra pressure on the bottom line for many UK hotels at a time when staff costs are due to increase and pandemic support measures come to an end.”Įnergy is the second largest spending category for hotels, second to labour. “The surge in energy prices is already being felt with unleaded petrol prices reaching record highs at around 150p per litre, as oil prices rise to $115 per barrel due to increasing fears over supply,” says Chris Tate, head of hotels and accommodation at RSM. The testing combination of shortages in labour and the unavailability of goods has led to increases in payroll and food and beverage, which has now coincided with rises in energy bills. To begin with, the hospitality sector has been grappling with escalated overheads since lockdown restrictions began to lift last April. He has already imposed an export ban on more than 200 products until the end of 2022, affecting about 48 countries. Should Putin respond to the sanctions by reducing its volume of supply, or even suspending it, the knock on effect this could have on the travel and hospitality industries could be huge. Whilst the UK relies on Russia for around five per cent of its gas supply, the European Union imports around 40 per cent of its natural gas from Russia. When the energy price cap is next adjusted in October this year, the wholesale price of energy has been estimated to top £3000 annually for households in England, Wales and Scotland. Russia is one of the largest international providers of gas, and western sanctions could lead to a constriction of supply which would further hike prices. ![]() Over in the USA, inflation is at a 40-year high, with further rises now expected following Russia’s invasion of Ukraine. Media sources have recently reported that inflation in the country has reached a 30-year high of 5.5 per cent. ![]() ![]() In the UK, the cost of living has soared. The impact on energy prices and operating costs Further stress will be placed on global supply chains and raw materials, and inflation will impact construction costs, labour, utilities and more. The disruption arising from the Russia-Ukraine conflict is varied. A growing list of companies offering support to victims of the humanitarian crisis can be found here – a testament to the industry’s resilience and tenacity. Travel and hospitality businesses, despite recovering from the harsh blows of the pandemic, were quick to respond. ![]() The devastating upheaval of lives and resulting measures imposed on Russia has sent the global economy reeling. Russia’s invasion of Ukraine has sent shockwaves throughout the world. Russia / Ukraine: IHM’s Eloise Hanson and Paul Stevens analyse the effects of the war in Ukraine and what they could mean for the travel and hospitality industries.
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