Glass half full?
At last week’s Leisure, Travel & Hospitality Boardroom Lunch, we welcomed Chairmen and CEO’s of some of the leading organisations from across the sector. Given the interesting mix of guests, we canvassed views on how optimistic they were for the months ahead.
In a week when Goldman Sachs reported a 60% drop in first quarter profits, continued media reports of low consumer confidence and uncertainty created through Brexit and a looming American election, we were intrigued to see whether the optimism built up in 2015 was alive and kicking or slowly dissipating. How optimistic were the CEO’s and Chairmen across the Leisure, Travel & Hospitality sector for the second half of 2016 and beyond?
In a lively discussion, it was interesting (and heartening) to evidence a sense of real optimism. The ex CEO of a global FTSE 100 and now operating partner of a leading global private equity fund outlined how his organisation had recently raised a multi-billion dollar fund to invest. He felt that while the battle to secure a good investment was never easy, predicting the future has never been more difficult, yet there was still plenty of money to invest and deals to be done.
The owner of another private equity fund also outlined the number of variables of any potential deal, commenting that any owner has to take a 10 year view of their investment (five years for them and five for the next owner). Given the ever increasing speed of change, of more widespread geo-political flux, on-going tech disruption and changing shopper habits etc, it was exceedingly difficult to predict what life will look like a decade in to the future. While this made their jobs harder in the short-term and added additional risk, he believed there were possibilities ahead that we aren’t even aware of yet as a result of these changes.
The CEO of one travel organisation who had recently posted strong results highlighted that although there were always challenges to adapt to, the long-term trends for his business, the sector and their core target market– a growing customer base with high disposable income – still remained strong. So, as long as they kept pace with consumer trends and continued to adapt, he saw nothing but a positive future.
The Chairman of a listed pub organisation also highlighted that while the organisation he chaired had gone through a challenging restructuring in the recent past, the organisation was feeling confident. He felt they had turned a corner over the last 18 months and their house was now in order. Even with the majority of their sites primarily out of London, the business was proving to be surprisingly resilient and morale was higher than at any other time in the recent past.
For one or two other travel businesses, one CEO and one Chairman expressed some worry about tourism numbers in certain markets, especially those impacted by terrorist attacks, but even then, it was often surprising how resilient and quick to bounce-back most markets were. The President of another global organisation also expressed optimism for the general tourism sector, highlighting that the global trends for passenger growth were still extremely positive.
The topic of Brexit was touched upon with one CEO dismissing it as a storm in a tea-cup for most businesses, and any current uncertainty would soon dissipate after the June referendum.
The topic moved on to whether it is more difficult being a CEO today than it was 15 years ago. While situational, the general consensus seemed to be that with more moving parts, moving at a higher speed that ever before, added to increased levels of scrutiny and the increasingly onerous demands of corporate governance, it can be a thankless task at times, especially for those in charge of publicly listed companies. While heading a private equity-backed organisation was not for the faint-hearted, it was felt that there was often more freedom to actually “run the business”, and not being distracted by the shareholder road-shows and corporate governance requirements of being a Plc CEO. One Chairman commented it’s unlikely to get easier and the job will only ever get more demanding.
A fascinating discussion therefore and while there was a degree of caution from some quarters, it was striking how much optimism and energy there was around the table.