Hospitality, Leisure and Tourism sector

Hospitality, Leisure and Tourism Sector

The hospitality, leisure and tourism sector is worth over £100 billion to the UK economy and is the 4th largest employment sector in the UK. All sectors will feel the effect of Brexit and hospitality, leisure and tourism businesses are no exception. So how can businesses in this sector prepare when the information available about our future trading landscape is so limited?

Here’s a few areas to think about:

Your Workforce

In a recent survey by YouGov, 10% employees in the hospitality sector are planning to leave the UK following Brexit. This will pose a huge threat to the sector and make replacement of leavers more difficult. We’re also likely to see wages increase and above the usual inflation due to a lack of available workforce. Businesses need to focus on retention of staff and ensuring they have an attractive offering to potential employees. Competitive benefits packages, shift patterns and flexible working arrangements may help to retain key staff and also attract prospective employees. Up-skilling existing team members can provide a broader range of skills and also offer cover when employees leave. Businesses are also considering different demographics, more part time workers such as parents or people approaching pension age and flexible working packages are key to tapping into this population. Lastly, focussing on a positive culture and environment will also help to attract and retain staff.

Your Suppliers

Your contracts with suppliers may need to be updated if they refer to “EU member state” - rendering the agreement invalid post Brexit. In general, we would expect to see suppliers update these accordingly, but you may need to ensure key contracts are updated so that you retain the terms of your agreement. Some hospitality businesses are stockpiling non-perishable/long-life goods in case of potential delays with goods coming into the UK. If you choose to do this it’s important to ensure your level of insurance is sufficient if the value of your stock has significantly increased. In the case of no-deal, the tariffs applied to goods from overseas, together with the exchange rate, will result in changes to pricing for product groups. It will be important to “shop around” for the best price on imported food and drink supplies. Many businesses use buying groups or compare supplier prices on a periodic basis, however, it will be important to do this on a regular basis post Brexit.

Your Guests

No matter what, we should expect to see some volatility in the exchange rate for Sterling. These variations will add to possibility of 2020 being a year of “Staycations” for many people in the UK. We could also see an increase in foreign visitors if exchange rates move in a favourable direction for them. Ensure you achieve a balanced marketing effort between foreign and domestic markets to reach both these groups. The combination of tariffs, exchange rates and wages may mean that you need to increase your prices. However, for hospitality businesses with a food and drink offering you may need to consider loyalty cards or even vouchers for local customers to encourage mid-week/off season trade – providing a discount to your headline prices to bring in the local custom.

Hospitality, Leisure and Tourism Sector