Meeting the challenges in a volume-driven market

Cost is likely to be a topic high on the agenda of all concerned in the hospitality bed linen market this year – textile rental laundries, textile suppliers and hotels of all sizes.

Hospitality companies had mixed fortunes last year says Mark Woolfenden managing director of Afonwen Laundry Services, the textile rental business focussed on the sector.

The family-owned linen hire group has three plants, Pwehelli, Cardiff and the White River laundry in Leeds and serves a customer base that stretches right across England and Wales along the M4 corridor and into the south.

Woolfenden says that the London hotel market was strong, boosted both by tourism and international business but in the rest of the country business was patchy.

He believes that, as a whole, the sector may have had difficulties holding rates but was more successful in maintaining occupancy levels and this helped to drive volumes. He also believes that there was a trend for more people opting for shorter stays which, from the textile rental point of view, helped to hold volumes. This was certainly the case for Afonwen.

Chris Kingsford, sales director at Tonrose, says that feedback from the company’s laundry partners shows that 2010 was a busy year for hotels. Certainly London hotels were busy all year with revenue per available room (revpar) up on 2009. He believes that Scottish hotels may well have seen revenues fall in December because of the snow although conversely hotels round Heathrow and Gatwick could have been busy catering for snow-bound tourists waiting for flights to start again.

He predicts that 2011 will also be a busy year for hotels and this applies particularly to budget hotels. Companies will want to spend less on accommodation for employees who are away on business and families will want value for money.

London will be preparing for the Royal Wedding in April and looking ahead to the Olympics in 2012.

Richard Yates at Linen Connect argues that hotels must have been busy in 2010 because Linen Connect was busy and so were its laundry customers – the company deals mainly with textile rental companies rather than directly with hotels.

Yates thinks that everyone was apprehensive at the start of 2010 because of the economic situation but then business was good.

Undoubtedly price was one of the main talking points in 2010 and this will continue in 2011.

The cause of the trouble was the ever escalating cotton prices due to shortages of the raw fibres.

A recently published report commissioned by the TSA shows that laundries are having to cope with massive cost increases when buying extra stock.

TSA CEO Murray Simpson says increases have reached unsustainable levels and will have to be passed on.

“Prices went sky high, with the highest level of increase for over 100 years,” says Yates. He adds that as a result customers that might once have insisted on 100% cotton bedding were now switching to cotton-rich products (in the main this means a 70/30 cotton/polyester blend). The polyester gives the linen greater tensile strengthen and also helps to reduce drying time so it lasts longer and helps to reduce energy use.

The switch to cotton-rich products continued and numbers increased during 2010. However, world demand for polyester is also increasing so its prices too are rising. As a result the price for any cotton-based product is at the highest it has been for a very long time, says Yates.

Raj Ruia, managing director at textile supplier Richard Haworth, says that one of the biggest problems for the market with has been surety of supply. In India, Pakistan and China, mills are having difficulty sourcing yarn and some yarn traders are stockpiling, which further disrupts the market.

His company is being very vigilant in terms of sourcing and has stepped up the level of quality checks as the massive price hikes could present opportunities for lowering specifications by introducing more polyester and in terms of weighting.

Ruia stresses that it’s essential to keep checking to ensure that quality meets requested specifications and laundries need to be aware of this.

Chris Kingsford at Tonrose says that cotton pricing shows little sign of slowing in 2011. Cotton and yarn are in short supply and this, allied to regular power cuts, is leading to extended lead times and in many cases to mills closing.

Laundries are still buying linen for new businesses as well as replacing older stock but more and more customers are moving to a 70/30 blended product.

Tonrose believes that if the cotton shortage prevails it may be necessary to adjust the balance of blends so that there is more polyester and less cotton in bed linen. This has already happened in America.

Tonrose hasn’t taken this step as yet but would not rule it out if the situation worsens.

Kingsford adds: “The laundry sector needs price increases to maintain its standards of supply to hotels in the face of increased raw material costs, not only of linen but also of diesel and energy.“

The company has consolidated its textile range into good, better and best ranges – good being 100% cotton, better refers to cotton-rich (because it’s stronger) and the best is cotton percale, with a 200 thread count.

This year the company is examining ways of adding value. Some products will be price sensitive but Kingsford says that critically continuity of supply will play a big part.

In terms of future developments, the company has several projects underway including a trial of 100% polyester sheets.

Mark Woolfenden at Afonwen says that the cotton pricing situation is best described as “a nightmare.” Price increases were getting worse at the end of 2010 and he sees no sign of a downturn.

The group relies heavily on cotton and has two standards, premium 100% cotton for bespoke linen and a 70/30 cotton-rich blend used for pool stock.

There is no short term answer and no magical solution to cotton pricing increases, says Woolfenden.

He says that passing prices rises on to hotels is difficult. Afonwen is achieving some increases but the entire industry is finding it difficult to persuade customers to accept any increase.

Woolfenden hasn’t noticed any trade down in quantities but says the level of enquires has reduced.

He does say that Afonwen has increased the number of suppliers in the supply chain and is forward ordering much more aggressively to safeguard against future rises.

Andy Jamshidzadeh, the director and owner of DG Textiles, says that cotton prices are disastrous.

At the beginning of 2010 he had several promising enquiries from big hotel groups but these were not taken up. Hotels were saying occupancy had dropped.

He believes that his experience is far from singular.

Whenever he meets others in the industry he finds they are having similar problems.

From Easter 2010 cotton supplies started to prove difficult both from Egypt and from Pakistan where the difficulties were compounded by the floods. Prices of Egyptian cotton went up three times last year and right at the beginning of 2011 Jamshidzadeh was informed that they had gone up yet again. Still Jamshidzadeh is adamant that he will stay with 100% cotton, which is luxurious and provides the best quality.

While it seems certain that price will dominate the market for hotel textiles, there are other considerations. “You still have to look at quality and service” says Linen Connect’s Yates.

The Siena 70/30 cotton-rich bed linen range is one of the company’s two best selling products (the other is Forta table linen).

Siena includes sheets, pillowslips and duvet covers.

This range was introduced in late 2009 but the marketing push began seriously in 2010.

White is the main shade for bed linen, although the company does sell some ivory-coloured linen.

Asked about other trends, Yates says that hotels are still using larger mattresses. In general, sizing sheets presents difficulties as there is no standard definition for the different size categories. For example, single sheet sizes can vary.

Linen Connect works closely with customers to make sure it provides the sizes that they need.

DG Textiles also says that white is now the popular choice for bed sheets and demand for ivory has faded. However, satin stripe duvet covers in 200/300picks quality give the bed a nice finish as do satin stripe pillow cases.

Andy Jamshidzadeh points out that at the middle to top end of the market customers want flat rather than fitted sheets.

The Spanish textile company Resuinsa is beginning to look more closely at the UK market and has appointed a sales agent, Angela Scanlon, who has over 25 years experience in the textile industry, to develop its presence here.

The company focuses on the top end of the hospitality market (four and five star establishments) and most of its customers are big hotel groups and independent hotels, with independent laundries forming a smaller part of its customer base.

In terms of products, it concentrates on bespoke linen with details such as trims and logos and colours requested by the specific customer.

It is also aware of the need to work to environmental standards in its markets and since 1998 has held the Oeko-Tex certification, which it renews annually.

In bed linen Resuinsa says that the main demand in 2010 was for 100% cotton, plain and in satin stripes, with thread counts of 200 or more.

The company has been explaining the price changes to customers but has found that they stick to the same specification but may lower quantities if budgets reduce.

Ruia at Richard Haworth says the company’s main product development will be in the ’ Boutique lines for the top end of the market.

These products are still stitched in Britain, indeed the company has the largest flat-sewn operation which allows it to handle varying sizing requirements.

Other possible developments include sustainable textiles. Ruia says the company is also looking at organic cottons but it is too early know if that route would be commercially viable.

Despite the present dominance of price, the market still seems to have some positive signs.

As Mark Woolfenden at Afonwen points out, there is still plenty of volume growth and he says hotel openings are expected over the next few years.

It’s a challenging time and there my be some consolidation in the textile rental market but he is confident about the future.