There is a great deal of negativity in the UK hospitality industry surrounding Brexit but I believe there are some positive outcomes for the sector.
In the recent months after Britain voted to leave the European Union, we have seen a significant drop in devaluation of the British pound which has made the UK an attractive place to travel for tourists and shoppers. This has been particularly good for North American tourists to visit the UK as the Euro has also devalued against the dollar. There is really no better time to visit Britain than now. This is bound to boost the hospitality businesses in the UK if the pound devalues further especially if Brits choose to stay in the UK for holidays, which will further feed the UK economy and keep the hotels on the seaside towns bursting at the seams. Brits spent £20 billion pounds on holidays within EU countries in 2015 that proves to be a whopping 60 per cent of all travel expenses abroad. Even if we spent a small percentage of that due to the falling pound, it will provide a significant boost to the UK economy.
According to Ufi Ibrahim, CEO of the British Hospitality Association, the UK hospitality industry could also benefit tremendously if the government lower the tourism VAT to 5 per cent, as this will entice foreign travellers to visit Britain and contribute to the hospitality industry. Currently visitors pay three times as much VAT compared to Germany, France, and Scandinavia and twice as much as Portugal, Italy and Spain. However, this is at odds with stats from the Office for National Statistics, which has reported evidence of economic growth for hotels and restaurants up 1 per cent in the first quarter following the Brexit vote, and up by 2 per cent in the second.
The research conducted by Deloitte/Tourism Respect found that this will boost the investments in coastal seaside towns that operate small independent hotels, pubs and cafes. Research also forecasted that it will contribute an additional £2.6 billion to Her Majesty’s (HM) Treasury between now and 2025 and generate 80,000 more employment opportunities. We should also see increased number of tourists coming to the UK this summer with the pound dropping and the market picking up from countries like US and China. William Kirby, General Manager of Co Fermanagh’s Lough Erne says he sees Brexit as a good thing and adds “commercially we are being successful and we would like to be driving that even further”.
Moreover, in terms of employment, the UK will still be able to operate under the Economic Law by forging a new trade relationship with the European Union. This new agreement will allow those European workers to continue with their employment within the hospitality sector in the UK. A quarter of the hospitality workforce is made up of migrant workers from EU and in bigger cities like London, this could be half of the workforce. As a result, no doubt we are bound to see a decrease in migrant workers in the UK depending on the negotiations.
Nevertheless, the benefit for those who wish to work in the industry could be far greater than ever before, and a significant rise in new job roles will be on offer for UK citizens in the long run. Challenges to fill up the roles as quickly as they appear may be daunting, but this will further provide opportunities to maximise on productivity with the right training for employers.
With many years spent in the industry, I would also argue on the severe exploitation of European migrants who are lured into working in skilled job roles with no prior experience of the industry or training. It is merely a choice for a better life for a migrant worker on a hope to make five times higher in wages than which they will receive in their home country. In the last decade or so, this is an incentive taken by many companies to lower the cost on recruitment and selection process. Therefore, Brexit will reinforce the HR strategies for companies on recruitment, training, and retention, in an industry which is facing an endemic issue of staff turnover. Over time this transformation will create a better working relationship between employees and employers, and we can see a significant rise in standards that is so poorly managed within the industry.
According to William Reed HIM Research and Consulting, research discovered that small and independent hospitality industry employers were keen to leave the European Union. Out of the 46 per cent of industry employees and companies surveyed, 39 per cent voted to leave and only 36 per cent to remain. The UK hospitality industry currently trades only less than 30 per cent with EU suppliers, so the employers felt confident in continuing with their relationship despite the result, and felt reassured by them that the business will carry on as normal.
For the UK citizens working abroad in the hospitality sector, Brexit could mean a bad deal as they may not be allowed to work overseas easily. However, this will provide more opportunities for employers to hire skilled workforce who will come back to the UK with substantial international experience from places like Dubai, United States, Caribbean, and South East Asia where standards are a lot higher than the one compared to the UK hospitality industry.
As there is a lot of speculations from hospitality employees and the public in general about Brexit, it is uncertain as to what it really means to the hospitality industry. However, now that the negotiations have begun between UK and the European Union, tremendous opportunities lie ahead for those who are passionate of building this great industry. We must focus on maximising the opportunities to take the industry to another level, and not be discouraged by the challenges ahead.
By Prateek Adhikari
Prateek Adhikari works for the University of Derby Online Learning (UDOL) as a Lecturer of Hospitality and Business. Prior to joining UDOL, he worked for the London School of Business and Finance as a lecturer of hospitality, tourism and business, and Sheffield Hallam University as an Associate Lecturer of Hospitality. Prateek worked as a general manager and a consultant of high end restaurants and hotels over the period of 18 years in the hospitality sector internationally. He is currently also a Director of PA Hospitality which is a hospitality consultancy company, where he overlooks the entire operations of the company and takes on projects from time to time to keep up to date with developments in the sector. He teaches across a range of hospitality, leisure, and business programmes both at undergraduate and graduate levels. His teaching focusses are around human resource management, hospitality operations management, business environment, organisations and behaviour, employability skills, service excellence, food and beverage management, conference and banqueting management, managing people, developing manager and developing professional business skills.