BATTERED BY BREXIT
Hospitality chiefs warn of ‘perfect storm’ for hotels and resorts as EU workers desert Britain and labour costs soar
BRITAIN’S restaurants, hotels and tourism businesses are facing a ‘perfect storm’ of high costs, labour shortages and security fears, say leisure bosses. They are calling for the next Government to tackle migration to stop the industry falling off a ‘cliff edge’ as European Union workers desert Britain.
A survey of the bosses of Britain’s biggest hospitality firms, including Caffe Nero, Hilton, Travelodge, Whitbread and cruise company Carnival UK, showed confidence had plunged over the 12 months following the EU Referendum.
The study, carried out on behalf of the British Hospitality Association by recruitment firm Heidrick & Struggles, found that almost half thought their business would suffer in the future, compared with just 10 per cent a year ago. Only 15 per cent thought that their business performance would improve, compared with 48 per cent in the 2016.
Nick Varney, chief executive of Merlin Entertainments and chairman of the BHA, said: ‘Cost pressures, particularly in employment and business rates, are our biggest concern. They risk making the UK uncompetitive just as we enter a period of increased uncertainty with Brexit. This, with the lack of clarity over immigration, means hospitality and tourism face a perfect storm in the coming years.’
Ufi Ibrahim, chief executive of the BHA, which will hold its annual summit on Tuesday, said the new Government would need to engage more with the £143billion-a-year sector. It is Britain’s fourth biggest industry, representing 10 per cent of the UK’s gross domestic product, employing 4.5million people.
‘We’ve been suffering from a skills shortage for some years and there is the fear we’re being pushed to a cliff edge,’ she said. ‘We’ve already seen a worrying fall-off in the number of EU workers since the referendum, and businesses are beginning to feel the pinch.
‘EU workers have been leaving their jobs in hotels and restaurants and are going back to their home countries, which is a huge concern. They’re uncertain whether they’ll be allowed to stay in the UK and aren’t feeling very welcome here.’
The industry has to attract 200,000 new workers a year to fill natural churn. The BHA estimates the end of free movement in the EU would mean the industry would have to find an extra 60,000 staff a year.
‘We are calling on any incoming Government to give us the time we need to make the strategic shift to be able to invest in the next generation and promote our industry as a career of choice,’ Ibrahim said. If the current shortfall grows, hospitality bosses say they will face a deficit of a million staff by 2029.
Travelodge chief executive Peter Gowers told The Mail on Sunday: ‘Even if the industry recruited virtually every person on the unemployment register there wouldn’t be enough to go around in the ten years following Brexit, especially in London.’
He added: ‘If we want to avoid price rises and cuts in investment from a growing industry, which created almost one in five jobs following the recession, the Government must act now and consult on a meaningful guest worker programme.’ The BHA is an apolitical body but Ibrahim hit out at the lack of ‘constructive dialogue and consultation with businesses’. She said: ‘The Government needs to talk to the industry before policies are introduced. We’re one of very few industries that sit outside the Department for Business. Perhaps it’s time to recalibrate so we can begin to have a greater impact on policy.’ Ibrahim warned that the hospitality industry had been hit with ‘a complete bombardment of costs and burdens’, from business rate changes and the introduction of the National Living Wage to autoenrolment for pensions and the new Apprenticeship Levy – all before the effect of the EU referendum result began to be felt.
‘The World Economic Forum found Britain ranked 140 out of 141 countries for price competitiveness due to the tourism taxes applied to consumers,’ she said, behind only Switzerland. The UK is one of just three EU countries charging the full VAT rate on tourist accommodation. Air passenger duty is also far higher than on the Continent.
IBRAHIM added: ‘So you have consumers who are already the highest taxed in the world, with every one of our main rivals, especially in the EU, all aggressively ahead of us in terms of their competitiveness.’ ‘This means the ability of these businesses to pass on the additional cost burden to customers is limited. That begins to eat into your margins, creating significant erosion.’
Sterling’s fall following the Brexit vote had benefited Britain’s tourist industry, as visitors capitalised on the exchange rate, but, warned Ibrahim: ‘Nobody should bank on that devalued sterling to carry us forward. We need to have the right policies in place to ensure our businesses can continue being viable and avoid mass consolidation, which would be the result of having lots of SMEs going out of business.’
Ibrahim said she wanted to see a bigger role for bodies such as the Low Pay Commission and Migration Advisory Commission after the Election. She said: ‘We want to depoliticise issues such as the National Living Wage and immigration. No matter who the incoming Government is, we want those bodies to be given an advanced role to advise on decisions and make sure they don’t harm the economy.
‘Brexit gives an opportunity for a new government to seek out businesses that cannot go offshore. And we’ve failed to see a constructive, collaborative approach to enabling growth up to this point.’