Brexit effects on the Hospitality and Tourism sector
Thousands of UK businesses seem to be struggling, to the point where many of them are going out of business. Whether large or small, it is becoming increasingly difficult for businesses to turn a profit. This is wide-reaching and affects various sectors such as retail, hospitality, tourism, real estate, manufacturing and so many others.
A lot of the issues these businesses face are a result of Brexit which has brought on economic uncertainty, slow growth and instability of the UK currency and capital markets. We have seen an increase in competition, increases in business rates, scaling back on expansion plans and in some extreme cases, the closing down of loss-making outlets.
An example is celebrity chef Jamie Oliver who closed two of his Barbecoa flagship restaurants in Piccadilly and St. Pauls. Although both restaurants went into administration, Mr. Oliver was fortunate enough to buy back one of them almost immediately. It was only recently that the Jamie Oliver Restaurant Group had to close 12 out of its Jamie Italian restaurants.
Have the tables turned for restaurants?
The increasing pressures on household spending in comparison to minimal income growth has caused changes in consumer buying trends. Specifically, the restaurant business has experienced a huge decline in fortunes. Those in the industry have attributed this to the high rate of cancellations of restaurant table bookings.
Restaurants are recording a loss from no-shows that are now running into the thousands in just one weekend. Some have blamed online booking apps that allow consumers to book several tables and not show up at all. Restaurateurs are now pushing back by naming and shaming “no show” guests, requiring deposits and even selling tickets for tables.
However, it is not all gloom and doom as there now seems to be a growing interest in the UK from across the world and a rush to take advantage of the after effect of the UK’s decision to leave the European Union. Foreign investors are taking advantage of the current exchange rate of the sterling against the US Dollar and the Euro, as it provides them with more purchasing power. They are actively seeking and finding opportunities to increase their investments in the UK.
The construction sector has seen a decline in activity due to a lack of confidence in the UK’s economy. But those within real estate and property management have seen an increase in the purchasing of commercial properties such as pubs, restaurants and hotels. These investors have either chosen to keep these properties as they are or re-purposed them for mixed-use or residential apartments.
According to experts, there is no reason why the UK would not continue to be an attractive investment proposition for investors, irrespective of our membership of the EU. In this climate, the key to success for UK businesses will be to avoid or keep debts low, maintain a strong brand and have the best people working for them.