Heartbreak In the Hotel Sector

Daniel Ordoñez wasn’t thrilled about living alone for months last year in Barcelona’s iconic 472-bedroom W Hotel. But as a senior engineer responsible for its infrastructure, he had to ensure idle machines, plumbing systems and a cavernous laundry kept functioning in the ghostly months of Spain’s nationwide lockdown. Ordoñez’s job included opening 1,400 pipe taps every five days. Some lonely nights he would decamp to the laundry room to watch his socks rotate in a giant washer used in ‘normal’ times to launder a linen mountain in this 27-storey luxury Marriott brand.

A dream job if you can get it, some might say, but the big picture is a nightmare. The W Hotel was one of thousands literally mothballed last year as Covid-19 tightened its deadly grip. At time of writing, many were still shuttered in local lockdowns. Imagine the cost to Spain’s economy. Hospitality contributed a whopping 12% to the nation’s coffers in 2019. This is the world’s second most popular tourist destination, attracting an average 82m tourists in a pre-virus year. In 2020, Hostelería de España, the confederation representing bars, restaurants, cafes and pubs nationwide, reported that sector lost 50% of its turnover, potentially E67,000m and 1.1m jobs. Up to one third of the 315,000 establishments earning around E123b which existed in 2019 could simply vanish.

It’s a disaster, crucifying those laundries married to hospitality. Even the most dominant industrial players like Ilunion, processing over 200 million kilos of clothing per year, or French multinational giant Elis could never have foretold this scenario. In 2018, Elis Manomatic boasted a new €22 million-plus investment in 13,000 square metres, able to process 500 tons of items per week, in Barcelona. It was a safe haven at the time, meant to provide 40% of total laundry services to hotels, restaurants and cruise ships in Catalonia. Now, the most optimistic industry players have turned to harsh realism. Even when tourism recovers, the industry must prepare for drastic changes.

Girbau, which boasts a 60% market share in the hospitality sector, “could not fail to suffer,” says its EMEA director, Paulo Barreira. He adds that while tourism will quickly rebound with increased mobility, “we understand that investments in equipment will have a temporal decalage of at least some six months”. Ecolab’s Daniel Anguera De Sojo (sales manager Spain) and Valentina Fontana (marketing manager south) join the debate: “While tourism is expected to recover reasonably fast, in one or two years, when the pandemic will be over, business trips and table linen are expected to decrease due to the normalisation of remote working and paper linen in the restaurants.”

The International Monetary Fund (IMF) predicted the country in 2020 was headed for the biggest decline in activity of all developed economies. And Brussels is projecting that Spain’s gross domestic product (GDP) will contract by 12.4% this year. The ECB institution predicts that the effects of the pandemic will cause a fiscal hole of 28% of GDP in Spain between 2020 and 2022, followed by Italy (24%) and France (21%). If the math stacks up, Spain could become the fourth country in the euro area with the highest public debt, behind Greece, Italy and Portugal (see panel).

There is one invaluable industry lesson learned: never again depend on a single sector. Industrial laundry investors will surely rethink and redesign to increase operational flexibility, pleads Berreira. Those serving purely hospitality have been closed for a year. But Ecolab says mixed laundries dealing with linen from hospitality and healthcare have fared a lot better.

Somewhat ironically, healthcare investment is throwing commercial laundries a lifeline. Take workwear, says Kannegiesser’s Carsten Oesingmann, sales director in Spain. “Here Covid has ensured an increase, especially in the hospital sector, and capacities are being cautiously built up. The workwear market and the laundry service for residents of nursing homes is underdeveloped compared to other markets. The machinery is outdated in many factories, but it has been continuously renewed in recent years. Modern logistic concepts have been brought to the attention of the owners and operators but have not yet been implemented across the board in the companies.”

Girbau, late last year, worked with the Naval Hospital in Ferrol to boost productivity and to fully overhaul its 30-year-old laundry in a turnkey project. This new facility was built on the site of former kitchens and adjoining rooms and now showcases Girbau equipment including a TBS50 batch washer with capacity for about 50 kilos of linen every three or four minutes. The Drain Intercooler system, a water-water exchanger to exploit the heat energy in waste water to preheat incoming water, saves around 30% energy. An SPR50 water extraction press allows shorter drying cycles and a CED+ 11.4 shuttle lifting conveyor distributes linen cakes from the water extraction press. Three ST1302 dryers finish linen drying. Two of the three ST1302 dryers are equipped with the Suction Loading system, allowing easy 30-second loading, independently of the batch washing process. Several folders and the uniform finishing system have replaced manual work. Belén González, head of the laundry department at the Naval Hospital in Ferrol says the facility can now handle the washing of some 3,000 kilos of linen a day.

Meanwhile at the Hospital Clinico Universitario Virgen de la Arrixaca in Murcia, during the Christmas holidays, Girbau designed and installed in five weeks a total laundry to wash 1000 kg of garments per hour.

Another area expected to hold its own is self-service. There was huge demand for household laundry appliances during nationwide lockdown, says 6W Research’s newly released 2020-2026 Spain Laundry Appliances Market. But not everyone can afford such luxuries. The Spanish Statistical Office shows an estimated 21.6% of the population living under the poverty threshold of E8,500 per year. Self-service laundries continued to grow by over 100% in Spain in the four years to 2018 – the latest statistics available – and there’s plenty of life in them yet, say pundits. Set up costs are cheap – a franchise model can cost less than E15,000 with low management fees.

The circa 1,200 laundrettes in Spain are popular among students as trendy meeting places, often bolstered by technology, music or coffee. They’re cheap to use - washing and drying 12 kilos of clothes costs less than E15.

Bloomest, the Miele Group’s self-service brand has over 60 stores throughout Spain. Speed Queen too is present in Spain with its newest self-service laundromat recently opened in Almuñécar.

Leading the charge in Spanish entrepreneurship is Mr Jeff which has wasted no time in crossing four continents. In October Mr Jeff unlocked Africa’s potential with three new laundry stores in Kenya. In five years this Spanish enterprise has opened more than 2,000 stores in 42 countries. It is a technology company delivering laundry and dry cleaning services but it focusses also on daily well-being services. Beauty Jeff, Fit Jeff, Relax Jeff and a string of boutique gyms embrace customers on and offline via an app. Another trendy upstart is Telelavo, claiming to be the world’s first “artisan laundry.” (see picture caption)

These kinds of models are often trumpeted by Marco Niccolini, general sales and marketing director of Renzacci, to illustrate just how traditional drycleaners will have to morph to survive. Failure to up their game with wellbeing offerings integral to laundry services will result in mass casualties, hurried along by Covid, he has repeatedly warned.

And the shape of the future? The OECD Economic forecast in Dec 2020 says in 2021, Spain will submit the full details of its Recovery Plan to the European Commission. If approved, Spain will receive some E72b euros between now and 2026.

Can the laundry market sit out this rollercoaster ride? Says Kannegiesser’s Oesingmann: “Many OPL and micro laundries will allow further concentration on the big players. “ But, he adds, realisation that competitive market pressure doesn’t allow anyone to achieve better prices will increasingly hit home. So operators will look for optimisation potential within their companies and processes – demand for energy and water savings, for example, or tracking by chips and barcodes to achieve better control and assign losses…..

Much attention will turn to care homes and workwear sectors which will have to fulfill more robust hygiene standards. In Spain, a significant portion of the linen used in care homes currently is washed internally but this will increasingly be outsourced to professional laundries, predict Ecolab’s Daniel Anguera De Sojo and Valentina Fontana. “We anticipate strong growth in both segments.” Like the rest of the world, Spain awaits a vaccinated, Covid-free future.

Media Courtesy : LCNI