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Ready to go again: How the UK’s hospitality and leisure sector is adapting to the ‘new normal’

For many firms, Covid-19 forced an unprecedented shutdown. But far from resting on their laurels, hospitality and leisure leaders seized the opportunity to spring clean and prepare for reopening in a very different environment.

Mike Saul, Head of Hospitality and Leisure, Barclays Corporate Banking, shares his reasons to be optimistic about the sector’s future and Kris Gumbrell, CEO, Brewhouse & Kitchen discusses how his business used lockdown to innovate and optimise its approach to reopening.

Reopening in the ‘new normal’

Last year economic uncertainty was rife resulting from Brexit, and consequently the country saw the slowest rate of growth since 20101. In addition to this, Britain’s impending exit from the EU cast doubt over the hospitality and leisure sector’s multinational workforce, and an increase to the National Living Wage led to a spike in labour costs.

Yet, 2020 has uncovered challenges that far outweigh those of 2019; challenges that few people would have thought possible. The lockdown enforced, to contain the spread of Covid-19, caused nearly all hospitality and leisure businesses to close, with only those able to accommodate takeaway and home delivery services continuing to earn.

To that end, Barclays Corporate Banking wanted to understand how hospitality and leisure businesses were adapting to the ‘new normal’ as it has been called. Our latest report undoubtedly shows a sector in need of an upturn in fortunes, but also one that is ready to make its own luck. While there is understandable uneasiness about what the short-term might hold, business leaders are looking to technology to refresh the way they serve customers and increase revenue through digital streams both now, and in the future. And with social distancing measures likely to be a long-term fixture, companies are also reimagining the physical space they have, whether that’s introducing new outdoor facilities, renegotiating rental agreements or even examining the make-up of their overall property portfolios.

1Source: https://www.bbc.co.uk/news/business-50373505^

The expert view

The importance of the hospitality and leisure industry has never been more pronounced. Being the third largest sector to the UK economy and contributing around 5% GDP2 , this is an industry that doesn’t stand still and whilst the period of closure felt like a lifetime for most companies, it has passed, and the vast majority of businesses are reopening, adjusting to the ‘new normal’ and operating in a very different environment.

While there are many new hurdles to overcome, I am hugely encouraged by qualities I see time and again from within the industry.

Mike Saul

Head of Hospitality and Leisure, Barclays Corporate

In the short term, confidence levels are low due to the fact businesses are not operating at full capacity; however there is cause for optimism. Support from the government to provide an immediate boost to the sector, including the VAT cut to 5% and Eat Out to Help Out scheme has seen strong initial take-up and additionally, businesses have seen an uptick in earnings from the staycation boom.

Future-proofing the industry is paramount. Businesses need to think about fulfilling their long-term goals, whether investing in technology, to rethinking physical space, they need to think about adapting to the ‘new normal’ and encouraging visitors. 

"In all my years of working in hospitality and leisure, I’ve never seen a climate as challenging as this. And while there are many new hurdles to overcome, I am hugely encouraged by qualities I see time and again from within the industry. It’s full of smart, inventive, resourceful leaders who will ensure the future is bright and the present is as good as it can possibly be."

2Source: https://www.ukhospitality.org.uk/^

Surviving to thriving

Our new research reveals three notable trends across the sector all of which reveal a clear focus on not only seizing short-term opportunities but adapting and innovating for the future.

The long game

The fragile nature of the industry has had a detrimental impact on confidence in business growth, particularly in the short term. To prepare for the long-term future businesses need to be better prepared and think about a more digital sales model if possible.

Technology revolution

The coronavirus pandemic has accelerated a ‘technological revolution’ in the sector. By embracing new technology, using analytics and harnessing the power of data will help accommodate more digital sales, better understand and cater to customer preferences and collaborate with businesses at a local level.

Good service, at a distance

The physical space businesses occupy, presents both opportunities and challenges in the ‘new normal’. Businesses need to think about boosting consumer confidence and putting measures in place to help customers feel safe. It is also worth thinking about property portfolios, to conserve cash and better prepare for success in the long term.

Case study: Brewhouse & Kitchen

Like many other hospitality businesses, microbrewery and pub business Brewhouse & Kitchen saw footfall drop significantly across its 23 sites in England prior to the introduction of formal Covid-19 restrictions.

Read our case study to learn how Brewhouse & Kitchen used lockdown to
innovate and optimise its approach to reopening.

Lockdown was never going to be a time to earn, so we decided to make it a time to learn

Kris Gumbrell

CEO, Brewhouse & Kitchen

Strategies for success

Five ways hospitality and leisure businesses can survive and thrive in the ‘new normal’.

Select
  • Create new contingency plans

    With the ever-real threat of local lockdowns or recourse to more punitive restrictions at short notice, be ready and prepared for such changes. Have plans in place to shift to a more digital sales model if possible and - if you’re a foodservice provider - ensure your sites are set up for takeaway, click and collect and delivery services to maintain revenues.

  • Prioritise staff wellbeing

    The hospitality and leisure industry’s workforce is its lifeblood. Make the health and wellbeing of your staff a top priority and be flexible about how people are returning to work. Listen to their concerns carefully and address them however you can. Also communicate regularly with staff to keep them up to date with the developments across the business.

  • Win customer confidence

    Safety is key. Win hearts and minds of your customers and ensure they feel confident about the health and safety measures you are putting in place. Use your website to clearly communicate these measures and have a Frequently Asked Questions section to handle any potential concerns. Listen to customer feedback and update your approach if necessary.

  • Harness the power of data

    Capture data through apps and your website to better understand your customers – their demographics, geographies and preferences. By truly knowing who is buying from you, you can offer more personalised products and price promotions. Tailored packages are more likely to convert to sales and lead to customer loyalty and retention in the longer-term.

  • Talk to your stakeholders

    Engage with trade bodies such as UKHospitality^, VisitBritain^ and the British Beer and Pub Association^ to help you understand what Covid-19 related policies and regulation mean for your business. Be vocal with them about your concerns so they can represent your views in wider discussions. Also have proactive conversations with landlords, suppliers and other stakeholders to ensure you have the most flexible payment terms set-up to help conserve cash.

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