Public companies? The sums just don't add up
It's my view that the UK hotels sector is just about to experience a major shake-up. The reason is that the wise men (mainly management consultants or accountants) have insisted for as long as I can remember that growth is a key prerequisite to success.
Shareholders have an obsession with growth because the greater the growth the better the return on their investment. It is on expectations of whether companies can deliver growth that their shares are valued.
It seems impossible for a company to sustain a 20% return demanded by shareholders over an extended period. Yet a 15-20% return was a normal expectation until the current downturn.
One cannot continue to acquire new companies, hive off the unprofitable elements of them and "rationalise" what is left indefinitely.
Not one of the top 10 international hotel corporations operating in the UK in 1988 remains intact today. They have either been sold - often more than once - or gone into liquidation or restructured out of all recognition.
The average term of office of a chief executive officer in an FTSE 100-listed company is only four-and-a-half years because they are forced by voracious shareholders to grow their companies by 20% per annum when the pound is inflating by less than 3% per annum. Typical gearing is more than 70%.
Worse still, the resulting company becomes a shadow of its former self because the funds that should have been reinvested in the core business have been paid to shareholders.
Investor greed leads to acquisition fever, which leads to disaster because in the long term it is impossible to grow faster than the economy in which you are operating.
There is a solution. Put your trust in a private company: they need not have shareholders, do not have to grow and can maintain zero gearing.
Genetic reinvestment is easy in a private company and customers receive better value from willing, confident staff who take pride in knowing profits are being ploughed back into their own companies and not used to finance takeover bids.
George Goring, Chairman, The Goring Hotel, London
Spare a thought for our lost London cabbies
Those in our industry should be aware that mergers and takeovers in hotel groups and subsequent hotel name-changes are leading to an increasing number of confused London cabbies.
I discovered this on the way to a Hotel Booking Agents Association meeting in London recently. My driver said that once they were informed of such changes by hotel groups through two publications for taxi drivers, Taxi Magazine and Call Sign. Maybe these aren't publishing name-changes, or have fallen off the lists of hotel press offices.
If so, spare a thought for cab drivers. It is vital for them to be informed to enable our clients to reach the right destination.
Sue Burgess, Operations director, Inntel
Time to focus on the core business
Having read the article "B&I contractors feel the squeeze" (Caterer, 23 January, page 18), I would like to make some comments.
All contracts contain clauses which protect either client or contractor in the event of a change in commercial circumstances.
One of the most common clauses protecting the contractor concerns any substantial reduction in the client workforce as a result of redundancies or employees moving from one building to another.
In such cases, contracts can easily move from profit to loss. If the client will not renegotiate the contract or accept changes to services provided, the contractor must either operate a loss-making account or terminate the contract.
To my knowledge, all contractors are experiencing situations like the one described above in a difficult business and industry market.
While a handful of contracts were terminated by Sodexho in the second half of last year, the company is now focusing on its core business, on growing the profitability of that business and on winning new contracts.
Nigel Forbes, managing director of Business and Industry, Sodexho, London
Training crisis that must be addressed
I recently applied to go on a chef's certificate NVQ level 2, but was informed that only two out of 20 people had taken up the places offered and that three people including myself may now have to be slotted into other courses instead, simply because of the apathy of other students and the present legislation that insists that 15 people must be on a course before it is economically viable.
While many of my professional colleagues would no doubt express their sympathy for the loss of such a valuable course, would it not be better to run the course for smaller groups in the interests of their careers, and the roles they could fill and excel in later?
For the time being, it looks like I will have to wait until September to secure a place on a suitable course or move further afield to take up a place on a fast-track course.
With only one in 100 school leavers choosing catering, I hope that Springboard UK addresses problems like this, as the two main reasons for not choosing catering as a career are the low wages and the long hours or double/split shifts.
Careers officers have a lot of obstacles to overcome, and if they fail in their task it will be a sad day for the future of the industry and all associated with it.
Richard Grantham, Creative chef, St Michael's College, Worcestershire
Put Blair in the picture
For some time your Clockwork series [now called "24 hours"] has included a question about what the person featured would ask Tony Blair. Can I suggest that you might care to collate these and forward them, in bulk, to No 10 Downing Street?
As I surmise that No 10 may be one of the few places where Caterer is not read on a regular basis, we could usefully share with the prime minister these often highly pertinent comments.
Naomi Arnold, Stoke Poges, Buckinhamshire