APEX Hotels has warned the UK’s move towards Brexit will make it more difficult to recruit employees, noting 76 per cent of its housekeeping staff in London come from other European Union countries.
Chief executive officer Angela Vickers flagged the recruitment issue as the Edinburgh-based company unveiled an 11.8 per cent rise in underlying annual pre-tax profits to £10.3 million.
This rise in profits at Apex, which has hotels in Glasgow and Dundee as well as in Edinburgh and London and is opening in Bath, was achieved as turnover rose by seven per cent to £61.3m in the year to April 30, 2016. The opening of Apex’s City of Glasgow hotel in Bath Street in September 2015 and a 30-bedroom extension to the company’s City of London property boosted accommodation stock by 134 rooms.
Apex, which is owned by the Springford family, was founded by Norman Springford, and is now chaired by his son Ian, cited strong trading in the year to April 30 and the additional bedrooms as the key contributors to the rise in profits.
Prime Minister Theresa May last week signalled the UK Government would be taking the country out of the European single market in a speech viewed as indicating pursuit of a “hard Brexit” approach. Mrs May has indicated that controlling immigration is a key Brexit priority for the UK Government.
Asked about the impact of Brexit on Apex’s ability to recruit staff, Ms Vickers cited emerging difficulties in recruiting housekeeping staff in London. And she flagged her belief that difficulties in recruiting employees would increase significantly over the next eight to 12 months.
She said: “We are starting to plan for this just now. It has not yet kicked in. I am hearing things, particularly from our London managers, particularly in our housekeeping staff, where they are finding it more difficult to recruit.”
Ms Vickers noted Apex, unlike some other hotel companies, had its own housekeeping staff so it was not “beholden to agencies”. She highlighted the large proportion of staff from other EU countries working in the UK hotel industry, and noted that a large proportion of Apex’s housekeeping employees were from Romania.
She added: “We are finding some of the positions a bit more difficult to recruit. We are thinking ahead, and maybe trying to use things like our apprenticeship schemes.”
Ms Vickers highlighted her view that the recruitment issue would “really start to kick in over the next eight to 12 months”.
She added: “We have seen that slight difficulty in London. I can only see that starting to increase.”
Ms Vickers said about 56 per cent of Apex’s staff were from the UK, with the remainder from overseas. She highlighted the greater proportion of overseas employees in Apex’s London hotels.
Apex currently has nine hotels, including four in Edinburgh and three in London, and has a workforce of more than 1,000. Ms Vickers noted the opening this summer of Apex’s 177-bedroom City of Bath hotel, the tenth in the portfolio, was likely to increase the workforce by about 100 on a full-time equivalent basis.
Ms Vickers signalled an appetite for further expansion but noted the company’s business model meant it had to look to cities that would provide above-average room rates.
She said: “We are always on the lookout for various opportunities. We have got a concentration in Edinburgh. We have got a concentration in London. We are looking at new cities – hence the reason we brought Bath on.”
Ms Vickers cited the strength of current trading. And, looking ahead, she expressed “cautious optimism”.
She highlighted the fact that much of Apex’s business came from within the UK. And she cited potential to take advantage of the weak pound to boost overseas visitors, from the US and elsewhere, to offset any downturn in domestic business.
Ms Vickers noted signs of a “little bit of an uplift” recently in the number of overseas visitors to Apex’s hotels in London, particularly from the US and Germany, on the back of the weak pound. The pound has tumbled since the UK electorate’s Brexit vote in June. Sterling weakness makes the UK a cheaper destination for overseas visitors.
Apex also reported an uplift in its hotel valuations, which rose by a total £10m to £336m.
Ms Vickers highlighted the company’s plans to develop Customs House on Dundee’s waterfront, next to the existing Apex City Quay, and to increase the number of bedrooms at the Apex Temple Court in London.
Apex achieved an 8.4 per cent rise in the number of rooms sold in the year to April 30, 2016. Occupancy rose to 87 per cent, from 86.5 per cent, while average room rate edged down from £126.17 to £124.99.
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