Hotels, restaurants and health and wellness businesses are amongst those businesses worst hit by current skills shortages with concerns over Brexit increasing the labour supply and vacancies are proving hard to fill. Some businesses have been forced to increase wages, which is adding cost and putting further pressure on operating margins. Business owners should review their talent pool / succession line and consider developing their current employees by providing additional training and development.

Intense contract price competition continues to put pressure on operators, in some cases driving them to undercut competitors just to secure the busiest routes. Operators should avoid agreeing to unsustainably low rates just to remain operational. In this climate of price competition, it is vital that all business owners focus on margins and forecast to make sure they are operating within their means.

PEOPLE ISSUES

COMPETITIVE PRICING

Consumer spending in the hospitality and leisure sector has remained strong despite the uncertain economic climate and low wage growth. A recent study by Mintel has forecast that we will be spending £141 billion on enjoying our leisure time by 2022 and tourism spend in the UK is forecast to grow to £257 billion by 2025. Due to this positive outlook, businesses in the sector – pubs, restaurants, hotels, health and wellness, gambling businesses and others are competing.

WHAT’S IMPACTING HOSPITALITY & LEISURE?

HOSPITALITY& LEISURE

Property cost increases, employment cost increases and increased prices for food and drink are putting pressure on operating margins. Accurate forecasting and keen cash management are essential to ensure businesses are operating profitably. Introducing efficiencies through control of energy usage and supply chain costs could also improve business performance.

RESOURCES

Increased use of online booking systems has made eating out/booking a table more convenient. Restaurants and bars canharness this technology to differentiate their customer experience by offering online ordering at the table or introducing more sophisticated software, allowing customers to select their table or even choose wine for their meal. Greater focus on customer database management and social media is also required.

TECHNOLOGICAL ADVANCES

Despite the low cost of borrowing, there's been a lack of investment in parts of the sector, which may be partly due to a lack of investable assets. However, confidence is returning and deal activity is expected to improve. With cash ready investors ready to take the plunge, food business entrepreneurs should be focused on developing a robust plan and existing businesses on demonstrating their profitability.

FUNDING / FINANCE

In order to compete, the sector will need to track trends closely, making sure they are giving consumers exactly what they want. Greater competition from new entrants is putting pressure on operating margins. There is a larger focus in the sector on providing customers with an experience rather than a service. For hotels, the low value of the pound has seen an increase in overseas tourism, while low wage growth in the UK has encouraged people to take 'staycations'.

MARKETPLACE COMPETITION

Stuart DicksonRetiring Financial DirectorBritannia Row

Britannia Row Productions have been a client of Menzies for 10 years and they have supported the company through many different stages ofdevelopment. Their proactive and strategic approach has given us advice in many areas. I can retire confident in the knowledge that Menzies will continue to offer my FD successor and the company the same high level of support and advice we have benefited from over the years.

Jaf AhmedCo-ownerAkashco LLP

We find Menzies very friendly and approachable, some staff have been here assisting with all our accountancy needs for nearly 20+ years, this is so important because you are made to feel important. Menzies response is quick, helpful and efficient, we just wanted to say what an excellent accountant and team they have and wish them all the very best on their journey as we both develop together.

Rannesh JansariManaging DirectorFushi Wellbeing Ltd

I have worked with Menzies in relation to a number of R&D claims for our company. We found Menzies to be very professional, timely, knowledgeable in the field and a pleasure to communicate with and learn from. Highly recommended.

Avia WillmentManaging DirectorJohn Willment Marine Ltd

We knew there was significant potential to redevelop the site and attract more business and were delighted to secure the finance necessary to fund our investment plans. What we didn’t realise immediately was that a significant chunk of this investment could be leveraged to help reduce our tax liability. Menzies helped us to make the most of our investments andsecure maximum value for the business.

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