Picture: ISTOCK
Picture: ISTOCK

London — Britain’s impending exit from the EU is making it hard to hire workers from the bloc who are at the centre of London’s hotel business, operator Millennium & Copthorne Hotels says.

The luxury chain, which owns seven four and five-star hotels in London including one in Chelsea’s Stamford Bridge stadium, said workers from the EU accounted for nearly half of its workforce in London properties.

While housebuilders and others known to rely heavily on east European labour have yet to report any big squeeze on workforces, the comments from the hotel chain are among the first signals from listed firms in the hospitality industry.

“Concerns about Brexit have affected the group’s UK hotels especially in London,” the company said in an annual results release, adding the issue was adding to pressures on labour costs from 2018’s increase in the UK minimum wage.

“The hospitality industry faced a range of geopolitical 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 company’s billionaire Singaporean owner Kwek Leng Beng said.

The British government has said workers already in the UK will be protected after Britain’s planned departure from the EU on March 29, but the failure to seal an exit deal has left the thousands of EU citizens in the country unsure about the future.

Weaker pound

With the value of the pound also having fallen sharply since the Brexit referendum vote in 2016, immigration from the EU fell to a six-year low in the year to last June.

“It is much less appealing to come to the UK, if you’re Polish and you see what you’re getting paid and you put that back to zlotys,” said Andrew Sangster, an analyst with industry website Hotel Analyst News.

Labour supply issues add to a range of headaches for hotel operators, who are facing intense competition from holiday home rental start-ups such as Airbnb.

Millennium & Copthorne said rising labour costs and sluggish demand stemming from Brexit were adding to pressures. Its performance was also hampered by the partial closure of the Millennium Hotel London Mayfair for refurbishment in 2018.

Its New York hotels continued to lose money due to its “inflexible operating cost structure”, arising mainly from the employment of trade union staff, the company said.

Full-year reported revenue per available room — a key hotel industry metric — fell to £81.57 in the year ended December 31 from £82.78 a year earlier. London revenue per available room also fell 7.4%.

Reported revenue for the year fell 1.1% to £997m.

The company said it was still looking at candidates for the position of a permanent CEO after the sudden departure of Jennifer Fox in September 2018.

Shares of the company, which fell 20% in 2018, were 1% higher at 461.5p in Friday morning trade.
Reuters