Riding the plateau - Ed’s letter

It’s always lovely to start the new year with a bubbling over of optimism and the great news about this sector - more than farming, more than storage businesses - is that optimism is the one thing we have. Like the Black Knight from Monty Python, for us, it’s always “’tis but a scratch”.

The latest figures from Michael Grove, CEO, Hotstats, suggests that the scratches have continued. Looking back at 2025 he told the recent event at Whitebridge Hospitality: “We still have a challenge around labour costs, we expect to see between 7% and 10% increase in labour costs, but a net of 4% overall was a lot lower [than it could have been] and a testament to difficult decisions and technology. But with revenue growth being flat we have seen profit decline”.

So, if you’re a business which features labour, then expect ongoing pressures on margins. This is no facetious comment; in the hotel sector, brands such as Bob W have been leading the way in getting rid of the need for a team at all. Expect to see more of their ilk and get used to self checkin and working those funny keypads.

So what lies ahead? For hotels, Whitebridge has forecast a year of plateauing performance and there are likely to be many in the wider hospitality sector who would wish to emulate such heady heights. At the time of writing, it looked as though the government was set to do that which it does so well and U Turn on the worst of the Business Rates shenanigans.

This would be a relief, but along the lines of ‘well I’m glad I didn’t fall down that crevasse’. You’re happy you didn’t, but when you were writing your business plan, you weren’t aware of any crevasses, just the pressures you could see at the time.

And in the main, those haven’t changed. And this, in itself, is all that the sector needs to feel better about itself. Even after the presentations, the mood at Whitebridge was happy. Unlike last year, we’re not expecting frequent Budgets. The furore around Business Rates has put the sector on the map for the government, as feisty, if nothing else. Maybe it will think twice before viewing it as a Golden Goose again.

So enjoy the plateau and use it to build solid foundations. Just stay away from the edge.