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Hospitality leaders fear rising prices and worsening staffing crisis

Published:  02 June, 2017

A majority of hospitality and leisure industry bosses believe that a ‘perfect storm’ faces the industry, according to a new report surveying leaders in the sector.

Commissioned by Heidrick & Struggles, in partnership with the British Hospitality Association (BHA), the report found 55% of leaders in the sector reporting that they were ‘concerned’ about the economy, with rising costs, employment challenges, the security of their businesses and a potential fall in consumer confidence as their major concerns.

Underpinning much of this concern is the rise in prices, following sterling’s dramatic and sustained fall against foreign currencies, which has already impacted on operators, with rising costs for food and drinks now inevitably having to be fed through to consumers, who haven’t felt the full impact yet.

“It is no exaggeration to say that hospitality and tourism face a perfect storm which is well articulated by our industry’s top executives in this report,” said BHA Ufi Ibrahim, of the report’s findings, which drew on feedback from many of the UKs biggest names in the sector.

“[There is] a looming recruitment crisis caused by cuts to come in EU immigration, rising costs on both materials and labour, increased business rates and a tax regime that favours our European competitors,” added Ibrahim.

One of the biggest issues cited by CEOs related to staffing, with Brexit and the potential curtailing of the free movement of EU workers predicted to exacerbate an already challenging situation in a market facing a serious shortage of staff.

According to an earlier report by the BHA and KPMG, hospitality business are anticipating a recruitment gap of over a million jobs by 2029, with hotels restaurants and bars heavily reliant on EU workers.

Half of CEOs reported that their workforce is 25% to 50% European, with that number rising to between 50% and 75% for a third of businesses.

The report suggests, post-Brexit, that the hospitality industry pay bill will increase by £1.4 billion in the first year, and could rise by just over £1 billion a year over three years, amounting to a total cost of £3.2 billion.

BHA figures confirm that the hospitality and leisure industry is the fourth largest employer in the UK, employing 4.5 million people, working across more than 180,000 businesses.

The BHA has begun actively encouraging UK people into the industry as part of a 10-year strategy to help redress the imbalance of overseas versus domestic workers.

The industry predicts that it needs to recruit an extra 60,000 UK workers this year, in addition to ongoing recruitment needs of 200,000 extra workers a year, which gives an insight into the scale of the staffing crisis.