Sports, Swifties and strikes - hospitality sector

Sports, Swifties and strikes. Hospitality sector outlook, firms hope for a bright summer. Sports, Swifties and strikes - hospitality sector Hospitality firms hope for a bright summer. Pubs, bars and restaurants are looking to holidaymakers,` Swifties and sports fans to provide a much-needed boost to this summer. However, as always, success depends on the British weather. Hospitality business bosses are looking to the skies, as they hope for the warm weather that could provide them a bumper season. The alternative - a wet or cold summer - could rain on the recent resurgence that many UK hospitality businesses have enjoyed after the difficult days of the pandemic. Preparing for a big summer There are certainly plenty of opportunities for businesses to capitalise on. Events such Taylor Swift‘s Eras Tour are expected to boost demand for accommodation and eating and drinking out. Swifties are each predicted to splash out an average of £848 on expenses including tickets, travel and accommodation[1]. The Euro 2024 football championship, the first major summer men’s tournament without social distancing restrictions since the pandemic, will also boost business. The British Beer & Pubs Association expects an extra 20 million pints to be sold over the four weeks of the tournament[2]. If England or Scotland make the semi-finals, pubs will be allowed to stay open for two hours longer. In fact, the football could provide the wider hospitality sector with a £613.7 million boost, according to research by GlobalData Retail for the website Vouchercodes[3]. Visitors tend to return to the same pub to watch future matches, so pubs will be working hard to keep them coming back. If we have good weather this year, venues with outdoor spaces will benefit the most. On the contrary, if the peak season is wet then people are more likely to escape overseas. At this stage, it doesn’t look likely to be a strong year for staycations. Earlier this year, a survey of 1,000 consumers for RSM UK showed that only 27% of families planned a staycation this year, down from 35% last year[4]. That tallies with what we are hearing from businesses: if holidaymakers are going to spend out on a big trip, they’d rather head to guaranteed sunspots. If the sun does come out this year, people may feel a little more comfortable about putting their hand in their pocket than in 2023. Inflation has fallen to the lowest level since mid-2021 and the Bank of England is likely to cut interest rates at least once before the end of the year. However, the cost-of-living crisis is far from over: nearly half (44%) of consumers say they are reducing their discretionary spending, according to a report by Barclays[5]. It’s not just holidaymakers, Swifties and sports fans that could help lift hospitality in the coming months - the gradual return of staff to city centre offices could also help. Nearly all (98%) companies have continued to encourage employees to return to the office, according to research by Towergate Health & Protection[6]. Some pub groups, including recently Shepherd Neame and Fuller’s, have already pointed to a rise in after-work drinks lifting their sales[7]. Other trends that could help this summer include the rise in popularity of low and no alcohol drinks – and particularly 'zebra striping’, where people alternate between alcoholic and non-alcoholic drinks in one outing; John Lewis claims that 47% of UK adults now do this.[8] More than one in three pub visits are now alcohol free[9], one of the reasons we are likely to see a continued trend for more daytime and family visits to pubs and bars. Venues will be expanding their ranges of no- or low- alcohol drinks to cater to these visitors; often selling them at similar prices to their alcoholic equivalents. Another enduring trend that pubs, bars and restaurants are likely to jump on this summer is premiumisation. Nearly half (49%) of adults bought premium alcoholic drinks in the 12 months to October 2023, even though 42% of them admitted finances were tight, according to research from Mintel[10]. One manifestation of this trend is the growing popularity of continental lager, like Damm, Peroni and Moretti. Strikes and new immigration rules Yet, however much the sun shines this summer, hospitality businesses will still have to navigate some tough challenges. Operational costs remain punishing, including energy and ingredient inflation, as well as the 9.8% rise in the national living wage (NLW) in April to £11.44. In April Bloomberg quoted UK Hospitality CEO Kate Nicholls as saying that the sector has experienced a £3.4bn rise in annual expenses[11]. The cost of finding and attracting staff is part of the problem: staff vacancies in the sector remain high, with chefs and waiting staff especially hard to come by. This is compounded by new immigration rules which raised the minimum salary threshold for a skilled work visa from £26k to £38.7k. Bear in mind the average wage for waiting staff in London is £28k. Other sources of uncertainty in the coming months include the continued threat of train strikes, and uncertainty around the general election. Reducing hours, ingredients, and sites From the pandemic to the cost-of-living crisis and the simple unpredictability of British weather, resilient hospitality businesses are well-accustomed to adapting to new challenges. Some restaurants, bars and pubs are trying to mitigate the current challenges by reducing their opening hours. A poll of British Beer and Pub Association members found 32% had reduced their hours due to high costs[12]. Menu engineering is also common, as firms reduce portion sizes or remove particularly expensive ingredients. This is easier for pubs to do than restaurants which may focus on a particular cuisine. Others are selling non-core and underperforming sites; Marston’s and Fuller’s are among groups that have recently announced sales of some sites. Whether pubs and restaurants will have to double down on these cost-saving steps is yet to be seen. However, it’s clear they should keep taking measures to safeguard themselves amid ongoing uncertainty. Our trade credit insurance offers essential protection, ensuring that hotels, restaurants, and other hospitality businesses are shielded against potential losses due to insolvency. In an industry where trust and reliability are essential, trade credit insurance strengthens the hospitality sector's resilience and capability to thrive in a competitive market.     [1] Source: https://home.barclays/news/press-releases/2024/05/it-s-a--love-story---taylor-swift-s-eras-tour-to-provide-nearly-/ [2] Source: https://www.theguardian.com/business/article/2024/jun/09/beer-and-new-tvs-euro-2024-to-fuel-275bn-spree-shops-and-pubs [3] Source: https://www.theguardian.com/business/article/2024/jun/09/beer-and-new-tvs-euro-2024-to-fuel-275bn-spree-shops-and-pubs [4] Source: https://www.rsmuk.com/news/uk-families-shun-the-staycation-in-2024 [5] Source: https://www.barclayscorporate.com/insights/industry-expertise/uk-consumer-spending-report [6] Source: https://www.hrmagazine.co.uk/content/news/employers-sustain-return-to-office-push [7] Source: https://www.thisismoney.co.uk/money/markets/article-13220379/Brewer-Shepherd-Neame-toasts-record-sales-workers-return-offices-pub.html [8] Source: https://www.johnlewispartnership.media/news/jlp/07082023/waitrose-introduces-dedicated-areas-for-low-and-alcohol-free-drinks [9] Source: https://harpers.co.uk/news/fullstory.php/aid/32863/Quarter_of_UK_drinkers_embrace__zebra_striping__with_alcohol-free_options.html [10] Source: https://www.mintel.com/insights/consumer-research/what-does-uk-recession-mean-for-consumer-spending [11] Source: https://www.bloomberg.com/news/articles/2024-03-31/uk-restaurants-and-bars-cut-hours-as-costs-soar-by-3-4-billion [12] Source: https://www.manchestereveningnews.co.uk/whats-on/food-drink-news/staggering-number-pubs-cut-hours-28881124