Yorkshire Corporate Review – September 2016
Monday 19th September 2016
In partnership with the Business Desk, partner Duncan Firman comments on how it has been an eventful year so far for the leisure and hospitality sector.
Not surprisingly, 2016 is most likely to be remembered as the year the UK voted to leave the EU, closely followed by the significant fall in the value of the pound, the resignation of David Cameron and the arrival of Theresa May and her new-look cabinet. Experts, politicians and your man in the pub remain divided on the impact Brexit will have on the economy, business and consumers.
Before that, in April, the National Living Wage was introduced, which resulted in over three million employees seeing an immediate increase in their hourly rate to £7.20. The initial reaction in the months leading up to and immediately following the NLW was that it would have a particularly severe impact on the leisure and hospitality trade, where there is a high concentration of small, independent businesses with a heavy reliance on low-paid workers.
So, with just under four months of the year to go, what has been the impact of these events on businesses and the sector?
At first glance, there is some cautious optimism. Visit England reported last month that following the referendum vote and resulting drop in the value of the pound against the Euro, there has been an increase in Brits taking “staycations” and an influx of foreign visitors to the UK, which has boosted the hospitality trade. Other factors that have been attributed to this trend are Euro 2016 and the Olympics, as well as security concerns elsewhere in Europe and further afield caused by recent terrorist attacks. However, the growth after June 23 follows a record-breaking first four months of the year pre-referendum, with British families taking eight per cent more trips within the UK than the same period in 2015.
A CBI survey published at the end of last month shows that restaurants, bars and hotels have led the expansion of Britain’s services industry over the three months to August. This indicates that, for now at least, the industry is shrugging off the initial fears over the Brexit vote.
Against this there are plenty of well-respected commentators pointing out that many smaller bars, pubs and clubs have had to close as the combined impact of the introduction of the NLW and uncertainty following Brexit hits hard. The same commentators are warning that this is just the start of more bad times to come. Statistics have been and will continue to be bandied about to advance political interests – and so should be treated with some caution.
In Yorkshire it doesn’t feel as though we are seeing the trade taking a step back or proceeding with caution against the background of uncertainty. Taking the thriving independent scene in Leeds and Bradford’s Northern Quarter as an example, savvy entrepreneurs serving quality drink and food in relaxed surroundings seem to have found their way of keeping consumers interested, engaged and spending their disposable income. A week doesn’t go by without seeing a new bar, restaurant or cafe opening up in each city.
With the traditionally busy summer season coming to an end and the rise in the Minimum Wage coming into effect from October 1, the true test over the next few months will be how the sector deals with a slowdown in activity in the wake of the vote to leave the EU and the uncertainty this has created.