14th July 2008
UK hospitality industry confidence is falling
More than one in three hospitality businesses in the UK are feeling less confident about economic prospects over the next 12 months than they do now, according to research launched by American Express.
The survey also found that overall confidence has decreased in the last 12 months, with only 29% feeling more confident about the economic environment, down from 38% in 2007. Among hoteliers the number feeling confident has dropped to 34% from 41% a year ago. In comparison for restaurateurs the figure is only 24%, a fall of 10%. For pubs the picture is similar with only 20% stating that they feel more confident about the economic prospects facing their businesses over the next year than they do today. The findings, part of the third annual American Express Hospitality Monitor 2008, showed that the industry is not taking the current economic dip lying down. On the contrary, it demonstrates that it is taking a measured and strategic approach towards counteracting the impact of the credit crunch. The industry recognised that consumers are feeling the impact of the credit crunch and as a result the sector is bucking the current trend of passing overheads such as the rising price of fuel onto consumers. Prices remained static and restaurants specifically only saw an increase of 2%, according to respondents.
The number of businesses increasing prices is down on last year and the sector is also less likely to want to pass on tax rises to customers than absorb them. Furthermore, key business objectives have remained the same, and 65% of businesses will in fact be focusing on reducing the costs of goods and services, making this the second priority behind growing the customer base. The sector is also rolling its sleeves up and intends to work harder to soften the impact of an economic downturn. Kathryn Pretzel-Shiels, Head of Hotels and Restaurants at American Express explains: "Like any other the hospitality sector is not immune to prevailing economic conditions, so it comes as no surprise that Britain's hospitality industry feels more circumspect about business prospects than it did last year. The economy is forcing the agenda to a certain extent but the industry is fighting back. There are still opportunities to make money by providing a quality product and memorable service, as consumers are still willing to dine out and are doing it more than ever before." The survey reflected this sentiment, with the overall health of the economy making a significant leap up the list of key challenges to hospitality businesses; 27 per cent agreed that this is a major concern, up from just 8 per cent in 2007. However direct competition remains the number one priority for businesses, with many looking to set themselves aside from competitors by implementing environmental initiatives, such as ethically sourced products, as a means to enhance their brand image. Hotels in particular have seen a marked shift in perceptions, where 34% regard environmental initiatives as a brand enhancer, compared with just 12% in 2007.
Kathryn added: "There has been a maturity of the role environmental initiatives have within the hospitality industry. Many respondents recognise that increased brand value can be achieved through association with an environmental policy. This has been evidenced in the establishment of procurement policies that source both environmentally friendly and locally supplied products, over more tactical practices such as energy efficient lighting and recycling." The Hospitality Monitor 2008 also included a survey of 1000 consumers and found that customers are 'warming up' to environmental selling points, vindicating the sector's increased focus on this area. Just under half of consumers stated that they are influenced by green credentials when making purchasing decisions, and 37% consider this feature important when booking a hotel.