Challenging times for West hospitality sector
With the cost-of-living crisis continuing to hit businesses across the region hard, Sean Smith looks at the challenges facing the hospitality industry this winter
WITH the threat of a recession now looming large, it would be fair to say that the last few years have been incredibly tough for the region’s hospitality sector.
While the Covid pandemic was hard enough, the region’s leisure and tourism industry continues to face a whole continuum of challenges in the aftermath – soaring energy prices, inflation at its highest level for decades, increased costs from suppliers, customer numbers down and the struggle to recruit and retain staff are just a handful of factors making it increasingly difficult to operate.
While previously there has been specific support for the sector, from reduced VAT rates to the extension of business rates relief, in addition to financial support in the form of various government and local council grants, the industry could be facing a bleak winter.
For many operators, it is no longer just Covid hampering recovery, it is other headwinds causing headaches. The rising costs of overheads for business owners, as well as customers cutting back on spending when it comes to eating out, is starting to ‘bite.’ Understandably, it is hard to pass those rising costs on to customers who are already feeling the pinch.
Unfortunately, and very sadly, for some businesses, it is make or break time. With pressures bearing down, there is no doubt some owners have no option but to shut up shop for good.
Despite unemployment rates reportedly at their lowest level since the 1970s, some of my own clients tell me they are still struggling to fill vacancies for chefs, front-of-house staff and management roles. There is a clear shortage of workers and it is a problem across the entire industry.
It is a very competitive and crowded marketplace – everyone is looking to take on staff and increasing rates of pay does not always solve the problem. It goes without saying that hospitality is hard work, with long and often unsociable hours involving weekends and evenings. Covid gave many people the chance to rethink their careers and reassess their work/life balance – after being furloughed, many left the industry altogether and that is perhaps why there is currently such a black hole in the sector’s employment market.
The support that small operators received throughout Covid undoubtedly helped them to survive and, in some cases, thrive. But what can be done to help hotels, pubs, restaurants and cafés to weather the current storm?
No one likes operating at reduced capacity, but for some this could be the saving grace they need. Tweaking menus, sourcing ingredients from cheaper suppliers, reducing opening times when it is not economically viable to trade and forensically examining operating costs to make efficiencies are all measures that some owners are having to take.
There is some light at the end of the tunnel with the extension of the Government’s energy bill relief scheme, but, even with this help, they say many businesses will still struggle to make it through to next spring.
There are calls to go further with longer-term support for the sector, including a lower rate of VAT and more business rates relief. UK Hospitality calls the current system an ‘unfair burden’ on hospitality businesses. They also say that additional costs will be incurred as the freeze on alcohol duty is scrapped.
Having battled their way through the pandemic and lockdowns, thankfully many operators are still very much in business. Without the support received to date, there is little doubt that results would have been poor, and many businesses would have failed.
Adaptability is now the key to survival – to remain profitable, businesses must adapt and those that do should continue to do well in a difficult market. Those that do not might continue to struggle, but at the very least their profits will be affected.