While many of the specific details are still to be announced as the UK and EU continue to negotiate towards a deal, we can accept that every business will be affected in some way when the EU transition period comes to an end. Different industries will be impacted in different ways, so it is essential to follow the right guidance for your sector to shape your preparations appropriately.
One sector that will be affected is hospitality. Hospitality covers a range of business types, including hotels, bars, events and leisure facilities. As such, there is a wide variety of operations covered amongst these businesses, leaving much scope as to how they may be affected individually.
In this blog, we have outlined some of the significant ways your hospitality enterprise may be affected so that you can prepare your operations sufficiently.
Changes to your workforce
One of the most significant ways that the hospitality industry may change in the UK’s future is the shape of its workforce. Currently, the industry relies on EU citizens with between 12.3% and 23.7% of those employed in hospitality hailing from the EU.
However, changes to immigration policy may see employment in this sector evolve. From 1st January 2021, anyone entering the UK will be subject to a points-based system to grant them the ability to live and work in the country. Under this system, anyone entering the UK will need to have a job offer in place of at least £20,480 and be able to speak intermediate-level English. Further points will be awarded for having a job offer with a salary of £25,600 or over and having a PhD.
With this new system, firms within the hospitality industry will need to make sure they have suitable job offers in place when recruiting staff from abroad. This may differ from the unskilled and lower-wage labour that has historically been utilised in these businesses, leading to increased labour costs or forcing companies to adapt the way they recruit for these roles.
Another risk following the UK leaving the EU to consider is falling migration, with EU immigration into Britain falling to its lowest level since 2009. This suggests that, even with vacancies in place, hospitality firms may struggle to fill these roles using the EU labour they traditionally have. KPMG have reported that, as a result, the hospitality sector could see a skills gap of one million workers by 2029.
It is worth noting that, although EU immigration has indeed fallen since the referendum vote in 2016, immigration from the rest of the world has increased. Hospitality businesses may be able to utilise this increasing pool of talent from elsewhere in the world to address skills shortages.
If you are a hospitality enterprise and hire EU citizens, it is worth making sure they are informed about the EU Settlement Scheme. This scheme gives EU nationals that do not have British citizenship the status to remain in the UK to live and work, as well as their family. The deadline for applying to the scheme is 30th June 2021. While the government hasn’t announced what will change for those who haven’t applied for the scheme by this date, there is a risk that these EU nationals will no longer be permitted to work in the UK. So, by making sure they have the right information to remain in the UK if they wish to, you can ensure you can continue to employ them and avoid disruption to your operations.
The issue of trade is one that has been and continues to be subject to much discussion between UK and EU leaders. It is also an area that affects the hospitality industry, with many businesses under this umbrella relying on imported goods as part of their operations. This could include restaurants importing food products, hotel importing toiletries or events companies importing services from the EU or anywhere else abroad.
While the details of a trade deal between the UK and EU are still being hashed out, and the UK working towards agreements with other countries, there is likely to be changed to the way goods and services are imported to British firms. These could include increased bureaucracy and border checks, which could, in turn, result in increased costs around trade and delays.
With the impact on your overseas suppliers becoming clearer once the changes come into play, there is a chance you could see rising expenses and even shortages of goods if they struggle to get past stricter border controls. It may lead to you having to change suppliers, such as to local and national providers, if this becomes a cheaper or more logistical alternative.
Be sure to keep up to date with trade announcements as negotiations between EU and UK leaders so you are aware of what the implications may be on your operations. You should also aim to keep communication open with your supply chain so you can account for any changes to costs or processes that become apparent over time.
Due to its nature, the hospitality industry is very closely connected with tourism. Hotels and other hospitality enterprises will rely on tourism for a large proportion of its custom.
There has been speculation that, with the UK leaving the EU, tourism may face a decline as a result of changed checks. In 2018, travellers visiting the UK fell by 5%, with many people attributing this to the outcome of the referendum. In 2020, this has been exacerbated by the current consequences of COVID-19.
With the hospitality industry already seeing a decline of potentially 59% in visits to the UK in 2020, the added pressure of the ending of the EU transition period in December 2020 might be unwelcomed to businesses in the sector. The result could be reduced income for these companies in a time where they will have already experienced hardship. It is worth noting that there has been no concrete evidence to suggest leaving the EU will result in falling tourism to the UK, but it is wise for businesses to consider it as a possibility and have contingency plans in place.
Depending on the impact on tourism, hospitality enterprises may need to reposition themselves to serve domestic visitors rather than those from abroad to help address any losses.
While the guidance in this blog should outline how your hospitality business may be affected in some of the most dominant areas, there is still much to be announced after what the UK’s future will look like. Depending on these announcements, there is a multitude of other ways your operations and customers could be impacted either positively or negatively once the transition period ends. Understanding what might change creates an opportunity for your business to pivot and identify other solutions to address any concerns in your current business model or new services/products that could be offered.
Similarly, every hospitality company is different, and you should shape your preparations in line with your unique requirements. This makes it vital to get tailored advice based on your individual operations and offering.
At Brexit4Business, we offer bespoke guidance to firms looking to get ready for life after the EU. Our team of experts have experience in a range of business types and sectors, including hospitality, so we can provide the right advice for you.
Get in touch today.