Hospitality & Leisure has arguably been the most severely hit sector over the last few years, and although the sector is showing signs of recovery, trading conditions remain challenging with high costs and ongoing labour shortages. Rising living costs are impacting consumer choices, as is an emphasis on sustainability, which is proving crucial for attracting consumers and employees alike.
KEY CHALLENGES OF THE HOSPITALITY AND LEISURE SECTOR
- Staff shortages and wages inflation – including new minimum wage
- Supply chain issues, rising food, drink, light & heat costs
- Consumer confidence and discretionary spend
- Competition
PEOPLE ISSUES
Skills shortages remain a challenge for the sector and businesses are seeing large increases in wage costs, as they look to retain and recruit staff and these increased costs are putting further pressure on operating margins. The industry has often lacked a focus on recruitment, retention and rewarding staff, however this needs to be a key focus areas for all businesses.
FUNDING / CASH FLOW
Recent years have put strain on cash flow and business owners need to ensure that they have a full understanding of the cash flow cycle in the business and to ensure that the business is adequately funded. Planning for seasonal fluctuations and ensuring accurate financial information will help business in the sector remain adaptable
ECONOMIC IMPACT AND CONSUMER CONFIDENCE
Although inflation and interest rates are settling, costs remain high. Businesses are impacted not only through increases in costs directly incurred, but also through consumer confidence. High levels of inflation dampen spend on discretionary items and activities such as holidays, leisure and eating out and may result in a reduction in hospitality and leisure spend. Business owners need to be in a position to react quickly to changes in consumer demand.
PRICING AND POSITIONING
As hospitality and leisure businesses compete for demand, this has often led to reduction in prices or other incentives to attract customers. Businesses should consider their value proposition or unique selling point, leverage technology to enhance consumer experience and drive efficiencies, helping to streamline processes and improve margins. Sustainability is also very much on the agenda and business owners will need to address the concerns of employees and consumers in order to retain customer loyalty and staff engagement.
Posted in Blog, Hospitality & leisure