There was a ripple of shock across The City when HSBC announced it was cuttings 3,166 jobs in the UK. It’s part of a three year plan aimed at cutting costs. HSBC is Europe’s biggest bank and this latest cull follows the loss of 2,200 jobs last year. Two thirds of the latest numbers of jobs cut are to be re-deployed in different departments of the bank.
Whatever the spin it’s still worrying news for The City. Banks are looking to save money and the most expensive part of any company is its staff. The job losses have a knock on effect on other businesses operating in The City; the decision doesn’t happen in isolation. Other banks might look at HSBC’s strategy and agree that it’s the quickest and easiest way to return to profit. Reducing staff numbers might mean short term pain but it also means lower costs and that’s an easy route to a return to profits.
It isn’t just the banking industry that feels the ripples of HSBC’s decision. Fewer jobs means less of an opportunity for relocation, for business travellers coming to London. Not only does that hit restaurants and bars but it hits accommodation and those providing serviced apartments. There is a reduced demand as a smaller team – in HSBC’s case in wealth management – means fewer needs for business trips or clients and colleagues from abroad to book a work visit.
For many within the business travel sector this could mean the difference between success and failure. Reduced demand means empty apartments. If they have built their business on a few core clients, or have allowed their business to grow organically without having a strategy in place. In truth, they might have been developing their serviced apartments business with only experience of the good times, and no preparation for the bad.
For firms like Clarendon Serviced Apartments – who have been operating for 25 years – the current downturn from which the economy is emerging (albeit bumpily) isn’t the first one they have weathered. Every five to ten years the economy can take a hit. Business readdress their budgets accordingly, sectors further along the line – like serviced apartments – realise they could take a hit as well. If they have never experienced it before then it can make them go under. Once they have experienced an economic storm though, they know how to prepare for it.
Weathering a bad economic period doesn’t just mean putting money aside for a rainy day. It is more about building a relationship with customers that exists continuously and makes the firm more attractive, helping them continue to win new business. Clarendon has been accommodating business travellers and those on leisure trips for a generation. It has managed to continue to operate during bad times because it understands the need to put the customer first. For example, Clarendon has understood how the business traveller has changed. Now, the travellers looks more for added value, for extras that make the service and the stay a little easier to enjoy and hassle free. So this includes offering free Wi-Fi, a weekly housekeeping service as well as Freeview TV and a phone line either to call the office or to phone home.
When big businesses take a hit, it is inevitable it will cause ripples that are felt along the supply chain. However, to make a company immune and to withstand the storm it is vital to continue to cater for customers, not to cut corners and to understand what clients want.