As the final easing of lockdown restrictions in England has arrived and evidence suggests tourism hotspots are likely to see unprecedented levels of trade over the coming months, with the appetite for staycations continuing to grow, businesses owners should seek to maximise the future potential from all this custom.
Following a turbulent year of closures and uncertainty in hospitality there’s a risk business owners will become so busy with the day-to-day operations they might miss the opportunity to make the most of the revival in trade.
Here are our top four tips for maximising recovery opportunities in the hospitality sector:
It’s almost impossible to operate as an accommodation provider without relying on online travel agents such as Booking.com. The cost of these agents represents 15% - 20% of net sales. Reducing the reliance on these agents will increase future profits significantly, but you need to be able to market to your guests and achieve direct bookings in the future. There’s no better time to ensure you capture contact details for all guests over the coming months, building up your customer database so that you can advertise to them in the future and provide special deals for direct bookings.
Throughout the various lockdowns, hospitality businesses took the opportunity to review their overheads, seek cheaper deals and minimise costs. When businesses get busy there is a tendency to lose focus on overhead control and erode the profits. Continue to monitor your costs closely. Our tool for assessing your current contracts is a great place to start: https://www.armstrongwatson.co.uk/news/2020/07/controlling-business-costs-quick-easy-and-free
Staffing is a huge challenge in the sector, a combination of Covid and Brexit has resulted in overseas workers returning home and employees finding other jobs. At the risk of contradicting my previous point - hold onto your staff and ensure you are rewarding them correctly. If you’re trying to recruit then you will need to consider how you can provide flexibility in work patterns, recruit in nearby locations or offer rewards to staff who refer a friend for a job. Ultimately, if the staff aren’t available then you will be forced to restrict opening hours to your most profitable times of the day or week. This can yield some surprising results where profitability can actually improve above full opening hours. It all depends upon your business model.
We’re seeing significant inflation in hospitality prices as demand outstrips supply. Households have saved more than £50 billion during the pandemic and there is an appetite to experience life and spend money now. Be bold when reviewing your prices and consider your local competition. In contrast, for VAT registered accommodation providers you may wish to offer incentives for payments of deposits and full balances received before the end of September. This is because any monies received before the VAT uplift in October will only be liable to 5% VAT. The VAT is calculated according to when you receive the money rather than when the holiday happens, so it may be worth sharing some of the savings to encourage early payment.