UK leaders display ineptitude; changes at Kempinski
UK leaders display ineptitude; changes at Kempinski
18 MARCH 2019 7:18 AM

If the U.K. government was a publicly traded firm, last week’s dramatic, unprecedented drama in Parliament would have seen a raft of resignations, which is something that did happen—for reasons that can only be guessed—at European luxury chain Kempinski.

Randy Smith, the chairman and co-founder of STR, the parent company of Hotel News Now, visited the London office of STR last week.

When I was introduced to him again and I asked how he was enjoying being in the United Kingdom, Smith replied that he’d noticed we Brits were obsessed with two things.

“All that’s on the TV is Brexit and sport,” Smith said.

It is true, especially last week when for the first time in a decade four British soccer teams—Liverpool, Manchester City, Manchester United and Tottenham Hotspur—have made it to the quarterfinals of the prestigious pan-European Champions League.

That said, their achievements have largely been overshadowed by the continuing debacle that is Brexit.

The knockout stages of the Champions League are played over two legs, home and away, with one team winning in an aggregate fashion. But Brexit seems to solely consist of home games where only one team—Club United Kingdom—seems destined to lose.

It is sound for a democracy to have at least two sides where opinions might differ, but we are now moving into the fifth calendar year where nothing concrete has happened since the original referendum on 23 June 2016, to the new Brexit extension in the negotiations timeline to 30 June 2019—and that date also might be extended.

There is talk from the European Union that it favors an extension of two years in order for the Brits—that includes me—to get its/our act in order. That would not be what Brexiteers want to hear, but it is a possibility.

And we also have a unique situation in which ministers in the government’s cabinet are continually voting against the wishes of Prime Minister Theresa May, the leader of that very government.

In any hotel company, or in any other industry, that would lead to sackings, resignations and board changes, but the only noticeable change so far are wobbles in the U.K. PLC’s market capitalization rate—that is, the strength of the pound sterling.

This leads to further worry, indecision and stalled investment in the nation’s hotel industry, and indeed, all industries.

Yes, if the pound slides, then the U.K. becomes a cheaper place to visit, but perhaps revenue can only be sustained in such a way in the relatively short term.

If Brexit was a hotel industry cycle—and it is beginning to look like one—we are in the period when private equity has already exited and new players are researching if what remains has the correct profile of institutional quality.

Or the sharks have entered the sea to look for English Channel ships foundering on the choppy waters of distress.

The fact that ministers are defying their boss—which they have every right to do—underlines that there is a serious flaw. This is no way of running a country, and so much has fallen by the wayside. For example, welfare reforms and universal credit, increasing expenditure on the National Health Service and improving apprenticeship schemes to name three that have very real implications for the worst paid, which does include some in the hotel and hospitality business.

In one vote, the Secretary of State for Exiting the European Union—that is in regular parlance the Brexit secretary—voted against his own government’s motion on Brexit, which has been pointed out with much glee is like the Chancellor of the Exchequer/Treasury secretary voting against his/her own budget, after finishing debate on the motion by encouraging MPs to vote for it.

Of course he did not offer his resignation, and it must also be stated that the main opposition Labour Party is seemingly just as divided, with some of its ministers-in-waiting defying its leader, too. There were more reported resignations from that party, though.

If a hotel CEO cannot fulfill his or her central strategic goal and thus grow the business, they’d be out, wouldn’t they?

By four votes, a motion was defeated that would have prised responsibility for Brexit away from May, which would have been another unprecedented move as far as I know.

So, now it sees the PM will come back this week to ask Parliament to decide between her deal—again!—or risking a lengthy delay to Brexit.

Now that “No Deal” is largely dead in the water, the PM is circling back to her deal, which has lost already twice.

Maybe we could just play a two-leg soccer match to sort out the mess, and winner takes all? Maybe Manchester City versus Barcelona, those appearing to be the U.K. and mainland Europe’s strongest club teams.

Randy, that last comment might elicit more emails than any mildly controversial comments on Brexit. Manchester City, the best? Are you kidding me? I expect letters to stream in.

These continue to be crazy times while hoteliers continue to suffer from labor and investment worries.

Kempinski news
Kempinksi is one of few luxury European hotel companies that remain independent of the huge chains. I cannot think of many others. Corinthia is one.

Last week eyebrows were raised when it was announced that Markus Semer, chairman and CEO, and Colin Lubbe, CFO, will leave the company upon the successful searches for replacements.

This happened on the same day the U.K. government saw the defeat of its motion asking for a no-deal Brexit to remain on the table.

Semer and Lubbe have been largely responsibility for an impressive growth in the luxury hotel company’s portfolio.

I do not know why they are leaving, but I am guessing a sale of Kempinski by its majority Bahraini owners is in the cards.

Maybe to be a hotel company starting with the letter M? Only a guess, only from me.

Maybe Semer and Lubbe, perhaps soon at a loose end, might want to take over Brexit negotiations?

Email Terence Baker or find him on Twitter.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

1 Comment

  • HARRY LARKINS March 18, 2019 1:26 PM Reply

    Maybe its a trend , battening down the hatches as we near the end of a run . Dream Hotel Group just closed all of its international offices letting Abid Bhut CEO EMEA go as the biggest casualty.

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