The leisure and hospitality industry contributes billions to the UK economy every year, with 10% of the country’s workforce employed within the sector. The industry is diverse, encompassing hotels, restaurants, bars, clubs, pubs, sport, and gaming. While each sector is unique in its own way, they all share many of the same challenges.
With a workforce comprised of many low-paid workers, increases to the National Living Wage and mandatory auto-enrolment have affected most companies operating within the industry, with employment costs at an all-time high. Combine this with a shrinking employment pool following Britain’s exit from the EU, and the challenges facing those within the sector are clear to see.
It is not just recruiting staff which is proving to be a challenge, but also enticing customers into parting with their cash. Already faced with changing consumer preferences, a cultural shift away from alcohol-centred activities among the younger generation, and a squeeze on discretionary spending, the Covid-19 pandemic only served to exacerbate these challenges.
Consumer confidence is at an all-time low, and for an industry which is dependent on consumer faith, this could have potentially disastrous ramifications. A reluctance to socialise outside of the home environment, and hesitancy in pre-planning events is causing huge levels of uncertainty for those within the sector unsure of what the future is going to look like.
While the hospitality and leisure industry has its fair share of challenges to overcome, there are also huge opportunities to be seized upon. There will always be a market for quality hospitality and leisure venues, as evidenced by consumers shifting away from buying ‘things’ and instead towards paying for experiences. For those establishments with something new exciting, or unique to offer, the audience is still there and eager to spend.
Changing consumer preferences open a door to new and exciting ways of captivating an audience looking for something different. This is not limited to new entrants to the market; however, it does require a willingness to embrace new ways of doing business whether this is in what is being offered, or how these services are being offered.
At Begbies Traynor Group, our hospitality and leisure industry specialists can work alongside directors and shareholders in order to put a robust, yet flexible plan in place, allowing your company to not just survive, but thrive, under these challenging conditions.
Our experts can help pave the way to a successful expansion project, whether this is achieved through natural growth, or accelerated through a series of mergers and acquisitions. The input of our corporate finance team can help the company achieve this growth by identifying appropriate acquisition targets, facilitating negotiations, while ensuring an enhanced due diligence exercise is completed prior to the acquisition.
When natural growth is preferred, our property consultancy specialists, Eddisons, can assist with all forms of property purchase, management, and consultancy to inform future property decisions.
For a leisure, hospitality, or entertainment venue experiencing financial or operational distress, seeking expert help and advice at an early stage is key. Companies operating within this industry typically have high outgoings from staff wages, through to stock, and leases on premises. Should turnover fall, these liabilities can quickly burn through cash reserves, seeing cash flow reduced to perilously low levels surprisingly quickly.
Obtaining advice from an industry specialist gives the company the best chance possible of effecting a successful turnaround. General advice is not enough; it needs someone who understands the sector inside out, and therefore sensitive to the challenges being faced, as well as aware of the potential areas for growth and opportunity.
We are here to help do whatever it takes to get yours or your client’s leisure and hospitality business back on a solid financial foundation. We can look at ways of reducing costs through a process of business simplification, scour the market for the most cost-effective way of introducing new funds into the business, or else negotiating with existing creditors to help better balance cash flow.