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Hospitality and Leisure: key considerations for 2022

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HOSPITALITY AND LEISURE: BUSINESS RATES AND BUSINESS COSTS

The sector has endured a tumultuous two years as a result of the pandemic and cash flow is tight. Costs are spiralling with upcoming cash flow squeezes in the form of VAT rising back to 20% and the upcoming National Minimum Wage rise. Therefore, it has never been more important to understand your cost base and focus on the big win areas for cost control. Here we look at the major areas to review for your business to successfully navigate 2022.

BUSINESS RATES VALUATIONS & AVAILABLE TAX RELIEFS

The hospitality sector makes up 3-5% of UK GDP but pays 13% of the UK’s business rates

  • Professional valuation agents can hold key to reducing the business rates burden
  • Significant cash refunds potentially available back to previous valuation date
  • Look for reputable agents – avoid those who reach out to you
  • Search for agents with a no-win/no fee type structure, but look for fee structure that suits your business & cash-flow
  • Future review of business rates system anticipated, expect rates reviews in early 2023
  • Improvements relief is little incentive unless cash is available for major improvements

RENT AND PROPERTY COSTS

Many businesses have changed the way they utilise their space or have amended their amount of space, so:

  • Consider whether this is a long or short-term trend for your business?
  • Consider long term space redundancy – is it time to downsize premises?
  • When struggling financially, you can look to request rent credits or deferments from landlords
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STAFF COSTS

  • Bidding wars for staff have resulted in wage bills rising 11-13% compared to Jan 21 in the sector

New national minimum wage increase will mean A: 6.6%increase for those ages 23 9.8% increase for those aged 12-22

  • Staff costs tend to make up 20-25% of sector revenue
  • The sector should anticipate circa 7% rise in total wage costs from April 22
  • It is important to forecast the impact on bottom line and take action to avoid cash flow problems
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LIGHT AND HEAT

130%-150% rise in electricity and gas forward contract prices from Jan 21 – Jan 22

  • It is important to understand current rates, time left on fixed contract and likely future rates
  • Speak to a broker to get an idea of future rates
  • Forecast the impact on cashflow and reflect on next actions
  • When renewing, balance benefit of lower rates on short term contracts against certainty of higher rates on long term contracts

HOW CAN MENZIES HELP

Menzies LLP is a leading firm of accountants, finance and business advisors. We are hospitality and leisure specialists and work with clients such as bars, restaurants and hotels. We can assist in areas such as:

  • Business reviews
  • Cashflow
  • Forecasting
  • Growth strategy
  • Remuneration planning
  • Recruitment and talent retention

HOSPITALITY AND LEISURE: ATTRACTING, HIRING AND RETAINING TALENT

RETAINING TALENT

Talent is split between shorter term roles driven by an hourly rates and those looking for longer term career prospects, often motivated by benefits packages. Considerations include:

Short term employees:

  • Wages always matter, and may well be the crucial factor but for these hourly paid employees
  • Harder to retain and create loyalty in these roles
  • Benchmark against the competition and against other high-profile employers – decide where you can and want to sit on the scale – what do budgets allow?

Long term employees:

These individuals will look for not just the salary package but also benefits that are important to them. Things like:

  • Enhanced benefits, such as healthcare
  • Professional development & career progression
  • Your reputation
  • Company growth prospects and the style and approach of management
  • Flexibility and working from home is now offered across many industries

ATTRACTING TALENT

YOUR HIRING PROCESS

  • Start early – it’s taking longer in the current market
  • Check where you advertise and what you are saying
  • Who is responsible? The market and candidates move very quickly. You need someone with a clear focus and time to deal with it daily – contact candidates, get them in quickly, make a good first impression with a slick process of interview, decision and offer
  • Use agencies or recruiters when you need help finding key people or if managing it yourself is proving too time consuming and difficult The induction period and initial training – welcoming, thorough, professional – making them feel valued from the start

Focus on benefits outside of remuneration:

  • Travel
  • Parking costs
  • Uniforms
  • Providing equipment
  • Meals
  • If there is overtime
  • Discounts
  • How you treat tips

RETAINING TALENT

  • Consider how you spend your money most wisely for the groups of employees you need to retain
  • You might need to have the budget to increase pay after an induction or training period or respond to an increase from your competitors in an hourly paid marketplace
  • You may want to consider sharing success – so the more successful the business, the greater opportunity for a bonus.
  • What additional benefits can you afford – and what appeals to your employees?
  • Especially, spot your top talent and tell them! Give them regular feedback and have a plan for career progression through the business.
  • But – most people leave because of their manager, not the job! Consider the day to day working environment and how are your people managed

CONSIDER:

For both attracting and retaining

  • Your methods of communication
  • Teamwork and relationship between colleagues Developing an understanding of employees’ personal lives
  • Good shifts and scheduling – appropriate and attractive to your target candidates
  • Keeping the work interesting
  • Creating a level of achievement
  • Training and feedback

HOSPITALITY AND LEISURE: TECHNOLOGY

TECHNOLOGY AND SYSTEMS INTEGRATION

Technology can be used to reduce staffing requirements – but needs to be deployed in the right way to suit your market. This can be broken down into 3 sections:

CUSTOMER EXPERIENCE

Customer experience remains key. Any new tech should also be fully stress tested to ensure reliability and a seamless user experience. The appropriate level of human face-to-face interaction should also be maintained – look for ways for technology to enhance rather than replace this.

STAFF EXPERIENCE

Staff experience can be enhanced by good technology and can help to manage:

  • Rotas
  • Leave
  • Sickness
  • HR records

Technology can also enhance staff communication and engagement, supporting efforts to recruit and retain talent. Rotas Leave Sickness HR records

BACK OFFICE EXPERIENCE

The business’s back office and operations can provide some easy wins by using technology to integrate systems and reduce the need for human data-entry. Intelligent software can help to manage:

  • Inventory
  • Menus
  • Give insights into profit margins and wastage

With an efficient finance function, timely and valuable management information can be produced – this can include cashflow projections and monitoring which can be invaluable in challenging periods.

The best use of technology allows you to make timely informed decisions.

APP RECOMMENDATIONS

STAFFING AND SCHEDULING:

Tanda: Assisting with workforce management, rostering, employee onboarding

Deputy: assisting with rotas ad time clocking

EPOS:

Kounta (part of lightspeed)

Finance function:

Data capture: (especially capture receipts and purchase invoices)

Cloud accounting:

Cashflow forecasting:

HOW CAN MENZIES HELP

Menzies LLP is a leading firm of accountants, finance and business advisors. We are hospitality and leisure specialists and work with clients such as bars and restaurants and hotels. We can assist in areas such as:

  • Business reviews
  • Cashflow
  • Forecasting
  • Growth strategy
  • Remuneration planning
  • Recruitment and talent retention

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Posted in Blog, Hospitality & leisure