29 Aug 2023

Focus on: Hospitality and Tourism

The Hospitality and Tourism sector covers a huge array of businesses – contributing £214 billion to UK GDP in 2022 – that cater to our innate desire to inspire ourselves, see and taste new things, even push ourselves out of our comfort zones; as a species we embrace adventure. It doesn’t have to be high-adrenaline, thrill-seeking adventure, it can simply be learning something new.

From expanding our minds (museums, places of interest) and waistlines (restaurants, pubs, cafés), to how we get there (travel companies, coaches, car rental) and where we stay when we get there (hotels, B&Bs, campsites, caravan parks), the services provided to the lowly traveller are seemingly endless.

A shift to digitisation might have brought a number of these businesses online – and the likes of Booking.com and Lastminute.com are here to stay – but that’s not to say that localised, specialist businesses don’t have their place. Even travel consultants on the high street, although there are fewer of them, can still help us in our search for adventure, for example when a higher level of expertise is required to pull together a more bespoke package. Monahans has the experience of working across the board to help these businesses succeed.

What challenges does the sector face?
Even though humans are ‘programmed’ to travel, running a business in the sector isn’t without its complications – seasonality, for example; the sector is one of the most vulnerable to changing demand at different times of the year, and businesses must remain savvy to this ebb and flow.

As for the complexities of the current economic climate, including rising interest rates, many businesses are experiencing these difficulties, but interest rate rises provide a particular challenge to businesses whose premises offer accommodation, who are susceptible to higher mortgage rates or business rates. There may also be a knock-on effect through your supply chain, for example if businesses that you rely on are trying to recover debt by putting their unit prices up.

So, what’s the good news?It’s not all doom and gloom, far from it. Naturally, we hate to mention COVID-19, which shut down the entire sector for the best part of two years, but many operators and sector bodies are starting to see the light at the end of the tunnel. For example, Visit Britain estimates that we’ll see the number of international tourists coming to Britain reaching 86% of pre-pandemic levels in 2023. And data from the Government’s Tourism Recovery Plan at least suggests that ‘hotel occupancy … and domestic tourism … [are] recovering at or close to 2019 levels’. So, maybe we’re close to being out of the woods.

Furthermore, spending sentiment shows that, while money is tight, consumers still value the importance of time spent with family and friends in social settings – and the quality of these experiences in particular. Whether it’s dinner out, a trip to the seaside, or a week in a coastal B&B, people are willing to part with their money as long as there is some kind of ‘wow’ factor; be it a great meal or a great view. Nor should we forget the power of social media in giving people a reason to get out and about; businesses that are neglecting the appeal of the perfect selfie are doing so at their peril.

How can Monahans help?
Exploring the changes in seasonal demand, first of all, businesses must ensure their reporting is accurate in order to forecast for the coming months. Having systems set up that allow you to run reports on future scenarios can give you a more accurate picture of the money coming in and your expenditure. Monahans can set this up – or bring a business back up to speed if it has neglected its reporting – and advise on using a range of software packages that can facilitate this process.

In the current climate, being extra vigilant with the pennies is crucial; as the saying goes, “Look after the pennies, and the pounds will look after themselves.” If businesses are struggling with a precise understanding of where their cash is coming from and going to, Monahans can help analyse cashflow to check for discrepancies. An organisation needs to know, for example, if it’s simply going through a brief lull, or whether a dip has been longer-lasting and if a strategy is needed urgently to halt a downward spiral.

Strategies to stand out from the crowd are also important when money is tight. These will vary from business to business but for the smaller, more local businesses, creativity is important. In our recent travel and tourism article, we talked about organisations pivoting, for example from camping to glamping, and investing in technology. A pub hosting an open mic night might just bring in a few more people to build up a core of sales and, with a Rugby World Cup on the horizon, pubs that can show these games are guaranteed to bring in a crowd.

Monahans may not be able to revamp your cocktail menu or commission your next exhibition, but we can help digitise your systems and analyse your cashflow. In short, we can help your hospitality and tourism business thrive.

Monahans’ expertise in the tourism and hospitality sector has you covered. Get in touch with the team today.

Simon Cooper