The results of MHA Larking Gowen’s fourteenth Tourism, Leisure and Hospitality Business Survey have just been published. High on the list of challenges was the weather in 2018! The weather played a big part in the trading results for a lot of tourism businesses in the eastern region.
For businesses in the tourism sector, 2018, nicknamed recently as the “Goldilocks year” (so called because there was too much snow in March, too much rain at Easter and it was too hot for the summer), saw changes in customer spending habits, leading to mixed trading results.
Many businesses have said that the weather is a leading concern for them and in response there has been substantial investment into weather-proofing attractions. This has helped increase visitor numbers and seen a boost to the economies of our region over recent years, with the economic value of the visitor economy across Norfolk, Suffolk and Essex now being worth over £8 billion.
Chris Scargill, tourism partner at MHA Larking Gowen, said, “While we, as families, all got to enjoy the opportunity of being outside more, once the warm weather arrived, our spending habits changed, and we enjoyed more of the low cost outdoors, but this had significant impact on a number of businesses in the sector.
“It certainly isn’t all doom and gloom though, and we’ve seen some real positives, but there’s no doubt the unusual weather patterns impacted a number of businesses, and it came at a time when businesses are seeing rising costs in rents, business rates, and rising staff costs through legislation.”
Highlights of the survey
In 2018, we continued to see the loss of swathes of the high street and the national restaurant chains, with some only being saved by entering into company voluntary arrangements (CVAs) with their creditors and heavy negotiations on rents. For some, it really is quite tough out there.
The results of the survey indicated:
- 49% of businesses saw revenue levels increase
- 31% suffered a decrease in income
A big issue in 2018 was the increasing awareness on plastic waste. The tourism sector has clearly been doing its bit, with the majority of businesses reducing plastic in their cooking, cleaning, and purchasing habits. More can clearly be done around plastic waste:
- 61% of businesses felt local government could help them more in their endeavours
- 57% feel the drive should come from central government
A third of businesses have increased marketing spend, with many making more effort to use social media and ‘sell’ an experience. The use of Facebook and YouTube has remained consistent, but 80% of businesses this year reported an increase in their use of Instagram.
The results showed mixed results on business profits:
- Only two in five businesses saw an increase in profit levels
Chris commented: “Profit levels are essential to allow businesses to keep reinvesting, so it was good to see profits rise for a significant proportion of the sector, especially the fact that one in three businesses increased profits by over 10% compared to last year.
“But with nearly a third of businesses seeing profits fall, this could be a worrying trend, particularly as two-fifths of those making a loss this year are anticipating losses in 2019.”
However, for now, investment continues:
- 16% of businesses plan to extend their premises
- three in five plan site improvements and refurbishment to help improve business
2019 will inevitably be another interesting year for the sector!
This article is designed for the information of readers. Whilst every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice.
“MHA Larking Gowen” is the trading name of Larking Gowen LLP, which is a limited liability partnership registered in England and Wales (LLP number OC419486). Where we use the word partner it refers to a member of Larking Gowen LLP. © MHA Larking Gowen.