It's all that anyone talked about last week, and yet one week after the EU referendum, the impact of the Brexit vote is still unclear. While politicians and the media speculate wildly on what happens next, until Article 50 is triggered and negotiations begin in earnest, it's impossible to say exactly what is going to change.
Despite this, there are several likely scenarios for hospitality that operators need to be aware of and prepare for.
The immigration debate dominated much of the narrative during the referendum, with the possibility of an Australian style points immigration system widely floated. This would almost certainly affect the current skills crisis in the hospitality industry. Currently, approximately 26% of hospitality workers are migrants, and 28% of these are from the EU. Recent figures suggest that 37% of all skilled roles in hospitality go to non-UK nationals. A worsening skills shortage would also necessitate a higher rate of pay to recruit staff, making employment issues one of the highest priority questions for hospitality in the coming months. We've already looked at the value of training and career development as an incentive for recruitment; for many operators it may be worth revisiting the topic.
It's not yet clear whether the decrease in value of the pound would be either a boon or hindrance to the industry. Consumer confidence is currently at its lowest point in three years; obviously usually a bad sign for businesses. However, traditionally the hospitality industry fares better than most in times of economic upset. As Trail co-founder and managing director Joe Cripps pointed out, 'lunchtime grab-and-go stalwarts [...] have historically grown fast in tough trading conditions.' Likewise, in Propel, Ian Dunstall wrote of the continued success of both the branded sector and coffee shops in the 2008 recession. Earlier this year, the pub industry was able to weather the pre-referendum turmoil that affected so many other businesses.
Those in tourism-rich areas could also benefit, as a weakened pound may lead to a boost in the number of international visitors, attracted by the favourable exchange rates. Already, American searches for UK hotel rooms have soared in the wake of the Brexit announcement, up 50% on last year's numbers. Additionally, hospitality operators may benefit from the economic uncertainty prompting Brits to opt for a staycation. In the long term however, should Brexit affect the UK's trade ties with Europe, operators should expect to see a fall in business travel and tourism.
The depreciation of the pound against the dollar and the euro will also see an increase in the price of imported ingredients; though the extent will depend on whether or not Britain is able to stay within the EU free trade market. There have already been reports of 10-15% increases in prices from European suppliers; though hopefully as the shock of Brexit settles, incidents like these will taper off.
It may be some time until answers are found to the many questions that Brexit raises, and longer still until the full effects, both positive and negative, are known. During times of turbulence, staying on top requires a thorough understanding of your brand and a considered action plan of how to achieve your aims. When purse belts are tightened, mediocrity and complacency are squeezed out; there won't be room for businesses that aren't offering the best possible experience to their guests. Much of the effort of hospitality operators over the coming months and years will need to go into managing this, and ensuring that their expenses and attentions are going into the right areas to remind guests of their worth.
