Hospitality ‘struggling to adapt’ amid economic volatility, says Menzies

Nearly two thirds of UK hospitality and leisure firms are finding it difficult to respond to volatile economic and political conditions, according to new research from advisory firm Menzies. 

The findings point to an “agility crisis” across mid-sized businesses as leaders contend with rising costs, shifting policies and rapid technological change.

The survey of more than 500 senior decision makers found that 64% of hospitality and leisure companies struggle to adapt at pace. 

Around 14% said they had missed a major opportunity in the past year due to slow decision-making, while 19% reported being too focused on threats to identify new areas for growth.

Financial pressures were identified as the most significant constraint. A third of firms cited cash flow and budgeting pressures, with 28% highlighting inadequate systems and analytics. 

Access to funding also remains a barrier, with almost a third saying a lack of government grants had slowed progress over the past two years, while others pointed to limited investment from shareholders or directors, alongside challenges securing bank finance and venture capital.

The report also revealed that regulatory uncertainty added further strain ahead of the Autumn Budget. 

Almost 19% said clearer guidance from regulators would support faster decision-making, while a third viewed increased regulation as the biggest threat to their business in the next 18 months. 

An additional 14% cited the Government’s Employment Rights Bill as a primary concern.

Menzies noted that people-related issues were among the main obstacles to responsiveness. 

Over a third of respondents had paused investment in training and development, and 21% had postponed senior strategic hires. 

Leadership challenges were also highlighted, with 43% calling for stronger alignment on priorities and quicker internal decisions. Poor communication, cited by 31%, and a short-term focus, cited by 28%, were said to hinder agility within organisations.

Simon Massey, managing partner, said: “Right now, too many UK businesses are stuck in ‘wait and see’ mode – waiting for the Budget, waiting for the economy, waiting for international politics to settle. But as our research shows, the result is that too many are missing the opportunity to innovate and grow.

“Businesses can’t control what’s going to be in Rachel Reeves’ red box, but they can control how resilient, agile and prepared they are for whatever may be around the corner.”