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Hospitality Strategy. What will 2022 look like for the industry?

After a grim 2020 and early part of 2021, the hospitality industry is slowly getting back on its feet. 

For many in the sector the pandemic gave them time to assess and evaluate what they were doing, and how they could improve going forward. And many hospitality companies will be going into 2022 with renewed optimism. 

This article provides an overview of how the sector is changing, adapting to a post-Covid landscape, including an outline of how the government is helping companies survive and thrive in the months and years ahead.

The UK hospitality sector is huge. It comprises around 143,000 businesses, employing 1.8 million people, and generates £40.4 billion for the UK economy. 

It is also fair to say that it was one of the sectors hardest hit by the pandemic. Hospitality took the full force of the lockdowns and restrictions that ensued, and many challenges remain, but the sector is ready to build back fitter and stronger than ever before.

UKHospitality CEO Kate Nicholls explains: “The last 18 months have seen hospitality lose over two-thirds of its normal revenue, 10% of its businesses and headcount fall by almost 30%.”

Yet she felt it was also true that the situation could have been so much worse. Support from the government has not been enough to offset the losses, but Nicholls feels it has undoubtedly saved jobs and livelihoods. 

She said: “Government intervention throughout the pandemic has been vital to ensure there was a hospitality sector as we opened for business again.”

The furlough schemes, government grants and loans, tax relief, business rent holidays and business rate relief have all been used to protect businesses.

The hospitality sector also came together as it felt it needed a better voice. At the beginning of 2021 a group of young hospitality professionals set up ‘Seat At The Table’, a movement to drive support for the hospitality industry. As the country went into a third lockdown its ‘Create a Minister for Hospitality in the UK Government’ petition gained real traction. It received the 209,984 signatures needed to be debated in Parliament and MPs voted to support the motion. And that idea has now been included in the new government strategy. That is now happening – see below.

The Hospitality Strategy

The UK government has stepped up its commitment to the sector and in July 2021 it unveiled the first-ever Hospitality Strategy, with 22 clear commitments. 

It stressed a healthy hospitality sector is vital to the UK economy and to communities up and down the country. It acknowledged the pandemic has had a huge impact on the sector, and believes its strategy will help in the reopening, recovery and longer-term resilience of the sector. 

The government wants to ensure the hospitality sector is well placed to reach its full potential and contribute to ambitious plans for growth, levelling up and environmental sustainability. 

New minister

Part of that Hospitality Strategy is to appoint a minister of hospitality and create a support team to help remove any remaining barriers to getting ‘back to normal’ – although Covid-19 is still out there and the prospect of vaccine passports still hangs over the industry.

It has also promised to help the sector overcome current recruitment challenges by actively signposting jobseekers to hospitality vacancies.

To help manage costs it has brought forward legislation to ringfence rent debt accrued from March 2020 for tenants who have been impacted by Covid-19 business closures. And it will work with the sector on access finance, including working with the government-owned British Business Bank and its delivery partners.

The government plans to work with local authorities and the hospitality sector to develop a model for hospitality-led regeneration hubs, with demonstrators delivered in England, Northern Ireland, Scotland and Wales.

Jobs and skills

A healthy hospitality workforce is key and, as part of it’s Hospitality Strategy, the government is exploring options for vocational training offers that support career paths in the sector. We’re talking apprenticeships, bootcamps and other qualifications like T-Levels. It will work with the sector to raise the profile of skills and careers in hospitality, and encourage businesses to participate in schemes such as Help to Grow. Improving digital and management skills will also be key.

But businesses need staff now. It has been estimated that there is a shortfall of between 100,000 to 200,000 workers across the sector, depending on what research you read. Some 65 key hospitality leaders, including Jeremy King and Skye Gyngell, have signed an open letter to the government demanding immigration requirements for hospitality staff be urgently relaxed.

They have real concerns that they will not be able to continue operating with reduced staffing levels. They want chefs, bartenders and sommeliers to all be added to the shortage occupations list.

The letter says: “Allowing the sector to recruit the staff it needs will result in higher turnover, more jobs and the resultant taxes returning to pre-pandemic levels more quickly. Hospitality is not a low-pay sector, and these are skilled jobs paying skilled wages. The problem is not that we cannot compete with other sectors on pay, but that the staff are not there in the numbers required.”

There does seem to be a disconnect here, with the sector looking to widen the net for workers overseas and the government wanting employers to make long-term investments in the UK domestic workforce.

Salaries are rising. Data released by Indeed show the average hourly wages advertised for hospitality roles in July across the UK have risen by 2.7% to £9.50 an hour. But many restaurants have given bigger rises to keep staff – Prezzo is hiking wages and Itsu expects to push up its wages by £5 an hour to attract workers. That, of course, means menu prices will rise.

Hospitality and the environment

There is going to be big pressure on the hospitality sector to be more resourceful and environmentally friendly too. It will be made to ‘support’ the government’s ambitious Net Zero goals. To achieve this the government will meet, create and share best practices on environmental guidance to help businesses decarbonise supply chains and achieve Net Zero, seizing the opportunity of COP26.

A reduction in waste and single use plastic consumption are high on the list too, and the government plans to help ensure any recyclable waste produce is collected for recycling.

Innovation and investment

The government also wants the sector to invest in innovation and bolster productivity. To do this it plans to bring sector leaders together with the UK’s world-leading innovation system, including universities and InnovateUK. This will help the next generation of hospitality start-ups and help them take advantage of emerging technology and digital trends.

It will also encourage technology adoption by leveraging the Help to Grow scheme and working with Be the Business and businesses to produce sector-led guidance.

What the government wants to achieve is dynamic new operating models that identify and overcome barriers to innovation.

You can access the ‘Hospitality Strategy: reopening, recovery, resilience’ here.

Regenerating high streets

The regeneration of high streets is another area where the government’s Hospitality Strategy is fuelling the investment of time, energy and some money. Local economies and plans for growth will be boosted with 15 Town Deals totalling £335 million. The Town Deals will fund community regeneration projects including repurposing empty shops on high streets, creating new public spaces, transforming riverfront areas into community hubs with entertainment and leisure venues, and creating a new digital enterprise and learning centre. Town Deals have now been offered to all 101 places that were invited to develop proposals.

Government funding will be available to save local venues loved by a community. Details have been published setting out how community groups across the UK can bid for up to £250,000 in matched funding from the £150 million Community Ownership Fund to take over local pubs, theatres, shops and sports grounds at risk of closure. The deadline for round 1 has passed, but there will be further biddings rounds in December 2021 and May 2022. 

Hospitality has also been given a boost with the streamlined pavement licensing system extended for 12 months across England so more shops, cafes and restaurants can make use of outdoor areas, with an intention to make this permanent.

Overhaul of tipping practices

In September 2021, the government unveiled plans for overall tipping practices, which it claims will help around two million people to top up their income. 

All tips will go to staff under new plans which will make it illegal for employers to withhold tips from workers. Some 80% of all UK tipping now happens by card, rather than cash going straight into the pockets of staff. Businesses who receive tips by card currently have the choice of whether to keep the gratuity or pass it on to workers.

The legislation will include:

  • A requirement for all employers to pass on tips to workers without deductions.
  • A Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency.
  • New rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.

Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employers can be forced to compensate workers, often in addition to fines.

Nicholls said:“UKHospitality supports the right of employees to receive the deserved tips that they work incredibly hard for. The hospitality sector as it begins to rebuild after 18 months of restrictions and enforced enclosure is already creating new jobs and driving the jobs recovery. Ensuring employees receive the tips they earn will further strengthen the sector’s ability to create jobs and support the wider economic recovery.

“For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff. With restaurants, pubs and other venues struggling to get back on their feet, facing mounting costs and accrued debts, we urge the Government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.”

Changing perceptions

There is a big image problem for hospitality. It is perceived as having long working hours, zero contracts and low wages, and critics believe the industry needs to up its game on pay and job security. The fact that many owners took the tips intended for staff also added to the sector’s poor image.

Industry bodies say one in five workers have left the sector during the pandemic. Yet shortages are not new – in 2017 hospitality had 90,000 vacancies. 

Prezzo is one business trying to lead the way. It has increased pay by 4% and also promised to close all its restaurants on Boxing Day. And it has introduced development plans to ‘encourage’ people to pursue a hospitality career and introduced clear pay progression opportunities for staff. 

More businesses need to follow this lead. And hopefully, with the above Hospitality Strategy commitments in place, they will have the resources to do so.