The biggest issues in hospitality in 2016

By Sophie Witts contact

- Last updated on GMT

The biggest issues in hospitality in 2016

Related tags: Bha chairman nick, Minimum wage, Maida vale

The hospitality and tourism industry faced numerous challenges in 2016, from the ongoing tussle with Airbnb to the rise of plant-based dining.

With 2017 on the horizon we look back at some of the biggest talking points of the last twelve months, and what they could mean for the future.

National Living Wage 

April saw the introduction of the National Living Wage (NLW), with hospitality firms required to pay all staff over the age of 25 at least £7.20 per hour, a 50p rise on the previous minimum rate.

The change received a mixed response from the industry, with chains including Starbucks, Bar Soba and Five Guys choosing to raise wages ahead of the April deadline.

However, a survey of the leaders of 41 companies including YO! Sushi, Gourmet Burger Kitchen and Travelodge indicated that the change had damaged industry relations with the Government​ after politicians failed to consult the sector prior to announcing the rise.

Groups including Whitbread - owner of Premium Inn and Costa - have already raised prices to combat the change.

But with Chancellor Philip Hammond confirming in the Autumn Statement​ that the NLW will rise to £7.50 an hour in April 2017, the industry could face an estimated wage bill of £13.2m​ over the next four years if if the rate continues to grow to £9 per hour by 2020.

Airbnb

Hoteliers’ ongoing battle with Airbnb continued in January with the British Hospitality Association (BHA) warning a Government committee ​that the site was allowing users to run potentially dangerous ‘psuedo hotels’ exempt from safety regulations.

Airbnb has always been quick to dismiss the claims, instead arguing that its platform gives consumers greater ‘choice’ in the accommodation market.

However, in the past month the site announced that from 2017​ it will be imposing a 90-day limit on London rentals to help grow the home sharing site ‘responsibly and sustainably’.

Hotels are also poised to continue to battle Airbnb for the younger market over the next few years. 

Accor announced the launch of its millennial-targeted brand Jo&Joe​ in September, while Gleneagles owner Ennismore will launch its new budget brand NoCo​ in the UK in 2018.

Plant power

There was a rise in the number of restaurants offering vegetarian and vegan menu options this year with a third of diners admitting to reducing their meat intake.

Chains such as Zizzi, EAT and JD Wetherspoon introduced a range of veggie-friendly dishes, while Gauthier Soho became the first fine-dining venue in London to permanently offer a vegan tasting menu.

The UK could also see more vegetarian-only Pret A Manger stores opening in future, with the chain’s meat-free London pop-up set to stay open permanently following an ‘overwhelming’ public response.

Rent rises

Spiralling rents in the capital continued to be a major threat to independent operators this year, with Michelin-starred Arbutus in Soho​ and the award-winning pub The Truscott Arms in Maida Vale​ both closing their doors.

A study by Cedar Dean Group warned that four in ten operators will have to close for good if rents continue to rise above inflation.

2017 could prove another difficult year for businesses, with restaurants coming up to their five-year review facing an average rent hike of 50 per cent.

Brexit

It’s impossible to ignore the biggest issue of the year, with the full impact of the UK’s vote to leave the European Union on hospitality remaining uncertain.

This year’s BHA Summit, taking place four days after the result on 27 June, ​saw industry leaders urged to embrace the outcome and work with the Government to make its voice heard in the negotiations.

Despite employers such as StayCity Aparthotels​ remaining adamant that the vote will have no impact on their expansion plans, many firms are concerned about the possible restrictions which may be placed on employing EU staff.

Lawyers have warned that businesses could have ‘staggering costs’​ to recruit non-EU staff, while food and drink prices are expected to rise​ by 3.4 per cent  in 2017 alone.

However, BHA chairman Nick Varney said the result could open up opportunities for the industry in future.

Speaking at the BHA summit in June, Varney said: “Tourism and leisure can continue to grow under Brexit.

“We should seize the moment and lock in that competitive advantage with a permanent cut to VAT for accommodation, and possibly in the future also for restaurants.”

To see BigHospitality's round-up of 2016 in pictures, click here.

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