Tag: Hotel and Leisure Management

As part of the UK government’s ‘Hospitality Strategy’, the Department for Business, Energy and Industrial Strategy took the initiative to establish a Hospitality Council.

The newly formed council includes representatives from Nando’s (Chief Executive Colin Hill), Starbucks (UK General Manager Alex Rayner) and Mowgli’s (Nisha Katona). Small Business Minister Paul Scully has commented:

“The hospitality industry has shown incredible creativity and resourcefulness through the pandemic, pivoting to new ways of doing business like al fresco dining and takeaway pints to stay safe, meet changing consumer demands and protect livelihoods.

With the launch of this council, we’re taking the next step in the journey to build back better from the pandemic by unveiling the experts who’ll be driving the reopening, recovery and resilience of the sector.”

Hospitality is the UK’s third largest private sector employer. It accounts for £130bn in economic activity and employs directly 2.9m people, with an estimated further 2.8m people employed indirectly. According to UKHospitality, the sector contributes to the exchequer in the region of £38bn in taxation.

As the above figures suggest, closer attention to the sector’s recent problems by the government is well overdue. In order to reverse the effects of Covid-19, the labour shortages and boost the hospitality sector, industry champions assembled by the Hospitality Council have a tough ask ahead of them.

While the effects of Covid-related lockdowns are being overturned gradually, continued government support will be vital in providing new opportunities, funding expenses and rolling out schemes to combat labour shortages and encourage people to apply for jobs in the sector. As Brexit has also introduced side-effects to the industry, this presents further challenges, which the Hospitality Council will have to answer.

For instance, regarding the amount of EU employees that won’t be able to make up the appropriate workforce for the food and drinks manufacturing and transport/supply chains. The provision of service sectors are not sufficient to service the demand, so the Council has the task of replenishing the sector’s workforce to an appropriate state.

One of the key words here is ‘appropriate’. Common misapprehension about the hospitality industry in some quarters is that anyone could work in hospitality, therefore the workforce should not be a problem, however this is not the case. There are many hospitality vacancies that can be filled by low-skilled labour, but there are many vacancies where there is a lot of training and development required.

The role of the Hospitality Council

Short-term labour shortages are being addressed alongside medium to long-term culture change, with improved training and development within hospitality. The Hospitality Strategy has encouraged al fresco dining, for instance, by making pavement licences permanent and extending takeaway pints until September 2022 to increase sales.

It has also added hospitality and catering qualifications to Free Courses for Jobs, meaning adults can achieve qualifications in professional cookery, food and beverage supervision and more. There is also a Kickstart and Sector-based Work Academy Programme (SWAP) designed to fill hospitality vacancies and a ‘Help to Grow: Management’ course that is 90% subsidised by the government.

Beyond this, there is continued Covid recovery and growth support with fairer business rates, taxation, duty system and other issues that the Hospitality Council will have to address. The government wants the UK’s hospitality industry to land back on its feet and is certainly putting in the work behind the scenes to ensure that this is possible.

Advice from ESA Risk

If you require advice on the process of recovery for your hospitality business or would like to know more about ways that you can make improvements, contact Hotel and Leisure Management Consultants Mario Ovsenjak (mario.ovsenjak@esarisk.com) or Nicola Trew (nicola.trew@esarisk.com)  on +44 (0)343 515 8686 or via our contact form.

Businesses claim that a reduced number of applications is putting a strain on recruitment, amidst reasons such as border controls, retirements and fewer EU applicants coming to work in the UK due to Brexit.

Additionally, some EU workers returned to their home countries during the pandemic, either due to businesses making workers redundant or to be with their families, meaning the industry has not only fewer applicants but a reduced workforce, too.

As Covid-19 restrictions ease, hospitality job vacancies increase

The Office for National Statistics (ONS) reports that 30% of hospitality businesses have said vacancies are currently harder to fill now than at the start of 2021.

Between June and August of 2021, there were 1,034,000 job vacancies in the UK across all sectors, with job openings in the hospitality industry increasing by 59.1% to 117,000, according to the ONS. Although the furlough scheme helped protect many jobs, some businesses in the industry accumulated debt which forced them to let staff go.

The number of employees on payroll remains below pre-pandemic levels by 6% in hospitality businesses, meaning many workers have either relocated or started new jobs in other industries that remained open during the nationwide lockdowns.

Furthermore, the fact that EU citizens now need a visa to work in the UK causes further worry that the hospitality industry will struggle with employee numbers.

Although hospitality businesses have been reopening since the easing of Covid-related restrictions in May this year, the uptake of staff has been slow and uneven. Perhaps the uncertainty of the future of hospitality businesses remaining open, due to changing government policy, is what has kept vacancies open.

Artificial wage inflation

In addition, there has been an artificial wage inflation during current staff shortages, as competition for a limited number of employees continues. This trend may well be sustainable in the short term while the demand is high and revenues are strong, with some reductions in VAT on food, accommodation and soft drinks helping EBITDA. However, once demand in the hospitality industry levels off – as people catch up with family events lost during the pandemic and overseas travel increases – this artificially increased level of pay is likely to become unsustainable.

The net result could mean an increase in zero hours contracts or redundancies, which will exacerbate pressures on the Exchequer. For now, a short-term solution for some enterprises is to include a mandatory (or increase an existing) service charge levy on customer bills in food and drinks outlets, with some accommodation providers starting to apply a service charge levy on accommodation, too. The hope is that this would supplement employees’ wages without affecting the bottom line once VAT returns to its normal levels.

Potential solutions to this include:

• Short-term solution – To introduce minimum entry requirements visa system for EU workers in hospitality (can be rolled out to road haulage, NHS, food production, banking and other sectors of economy where we experience shortages). The requirements to be granted such a visa could be, for example: individuals should have a firm offer of employment and no recourse to public funds (other than primary healthcare and A&E) and have private health insurance. Such visas should be valid for a fixed term of 5 years, with those who stay/contribute for 5 years qualifying for indefinite leave to remain.

• Medium- to long-term solutions – Spend time and resources on promoting wider benefits of working in hospitality: fast-paced increase in earnings potential as your career progresses, meals and uniforms on duty in most cases, reduced travel offers in some cases and so on.Use the initial 5-year period to increase funding for apprenticeships and all other forms of education and retraining for hospitality (and other sectors as above), allowing for attrition of employees from the EU when the initial 5-year visa term comes to an end.

Hospitality Apprenticeships Week 2021

In response to the staffing shortages, industry leaders have initiated a ‘Hospitality Apprenticeships Week’ to encourage young people to apply for jobs in the sector. The campaign aims to educate and inspire potential recruits about the variety of opportunities within hospitality, with themed days focusing on different roles, including supervisory and managerial positions.

As the furlough scheme has now ended, the apprenticeships initiative is expected to enable hospitality businesses to combat the numbers of vacancies in the industry and to advertise the prospects within it.

Education provider BPP has posted: “To mark National Apprenticeship Week 2021, we’ll be using our platforms to raise the profile of apprenticeships and the benefits they can offer both employers and learners.”

Apprentices from the Stonegate Group, Fuller, Smith and Turner PLC, Marston’s PLC, Mitchells & Butlers, JD Wetherspoon, McDonald’s, Springboard and Diageo have confirmed attendance to the ‘Hospitality Apprentice Showcase’ event, which forms a part of the industry-focused week.