What challenges will the hospitality industry face post-Brexit?

It is alarming as we inch closer to Brexit that it is still unclear what the impact of leaving the EU will have on the UK economy and its people. Pundits are trying to predict an outcome, but until the goalposts are cemented in, there is actually still no way of knowing exactly what will happen.

Will we crash out of the EU without a deal? Unlikely, but possible. Will there be another referendum to turn this catastrophic political game on its head and cancel Brexit? Again, unlikely. What kind of deal we are going to get? Even though we are in the final straights of Brexit, we still have no idea what kind of country we will become on Brexit day, March 29 2019.

The uncertainty alone poses challenges for the hospitality industry. Even with the most positive Brexit outcome, businesses in the hospitality industry face a number of challenges in the coming years as a direct result of Brexit.  

Chronic skills shortage expected post-Brexit

According to a report commissioned by Planday, Brexit will cause a shortage of at least 60,000 hospitality workers per year. There is little doubt that a no-deal Brexit would be catastrophic for the hospitality sector, which would limit significantly the number of EU workers coming to the UK.

A recent report published by thinktank Centre for Cities warns Britain faces labour shortages in London and the south-east from a no-deal Brexit unless the Government extends freedom of movement for at least two years.

Prime minister Theresa May has recently confirmed that the UK will prioritise high-skilled workers in a post-Brexit immigration system, which is bad news for the hospitality industry who rely on many low-skilled EU workers.

In response to May’s announcement, UKHospitality chief executive Kate Nicholls said: “In the wake of today’s immigration policy announcement, we face mounting concerns over the future of the hospitality workforce. A system based solely on high skills and high wages will not work for hospitality where we have labour shortages. The sector employs over three million people, many of whom are migrant workers, but under the new policy 90% of these roles could not be filled under planned changes.”

Attracting new homegrown talent

The chronic skills shortage expected post-Brexit poses a particular challenge for the hospitality sector. The solution revolves around promoting hospitality jobs to British workers as viable career options. At the moment there is a view that hospitality jobs are low-paid. The consequence being that many young people view these types of positions as stop-gaps, rather than jobs with long term prospects.

Harry Murray, chairman of Luckman Park Hotel and Spa and a Master Innholder, has worked in the hospitality industry for over 50 years. In an interview, he said, “On average, they say the number of EU workers in hotels is between 12.5-25%, but in some hotels and restaurants that can be as high as 35–40%. With less EU workers coming into the country, this poses a serious problem. We need to find solutions. Our biggest challenge now is to attract more people to join the industry.”

On finding a solution, Murray goes on to say, “We need to start with parents and teachers – parents have a huge influence on what their children do. There’s also an opportunity for the over 55s.”

Food and drink prices predicted to rise post-Brexit

A recent survey by Prestige Purchasing, the country’s largest Independent provider of procurement services to the foodservice and hospitality sectors, showed that a significant number of food supply chain leaders are fearful about the impact of Brexit. Fears revolved around changes to import tariffs, migrant labour restrictions and a weakening pound.

There were high levels of concern amongst survey respondents about product availability, food costs and food quality, as well as the associated rising costs of distribution. As many as 73% of respondents felt that leaving the EU without a deal would result in negative consequences for the food and drinks, and hospitality sectors.

The slump in the value of the pound is already having a significant effect. According to recent reports: “Since the referendum outcome in 2016 the CGA Prestige Foodservice Price Index has shown 11% food and drink inflation, caused mainly by the slump in the value of sterling.”

The consequences

Brexit will have inevitable consequences on businesses in the hospitality sector, not least because of the restriction of movement of workers from the EU. As the hospitality sector struggles to find a way forward, businesses in the industry must also look for the positives if they are to survive.

A weak pound will negatively affect many businesses, but it will also attract more visitors into the UK. The weakening pound also increases the costs of holidaying abroad, which will have a positive impact on a rising staycation crowd. Adaptability is key. Hospitality businesses will need to work hard to attract and retain a new British-based workforce, take advantage of any opportunities flung by Brexit, such as an increase in tourism and adapt accordingly.

By Dakota Murphey

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