Month: September 2022
1. Current prospects. You probably don’t need me to tell you that the immediate and longer-term prospects for tourism, leisure and the visitor economy in general are looking even bleaker, this week than they were a month ago, following international and domestic events over the last few days and weeks.
Of note are the still “mysterious” damage to key Baltic undersea gas infrastructure and the concurrent annexation of seized and in some instances now reoccupied Ukrainian territory, the mobilisation of Russia’s Army reserve and implicit threats by the Russian leadership to use all means available, including tactical, battlefield nuclear weapons (an absurd but very real concept). Combined these makes the likelihood of de-escalation of the ongoing undeclared, international economic war and the associated, currently limited ground war in Ukraine, rather more remote and, indeed, further escalation a very real possibility. Regardless of the implications of this alarming state of international peace and diplomacy, one of the obvious consequences is that at the very best, the associated worldwide energy, (and food) crisis isn’t going to stabilise, let alone improve, anytime soon.
Meanwhile at home the welcome news of a six-month energy price cap for business has still left us with, as with the domestic price cap, a significant degree of ongoing confusion and continuing uncertainty around what it all actually means to whom, in actual pounds and pence. The cap essentially limits the level of financial pain that will be experiences but doesn’t in any way remove it and, for some (many?), that supposedly capped level of pain will, because of the level of necessary consumption, remain unbearable. Consumers will have less disposable income and business increased costs, regardless of the cap.
Regrettable, the energy crisis has also proved to be the least of our potential worries. The money men and money markets have reacted very badly to the other major components of last week’s mini budget. The pound crashed (recovered today but for how long?), gilt yields plummeted, pension funds were on the verge of collapse, interest rates and costs of Government borrowing climbed steeply, confidence in UK fiscal policy and fiscal credibility fell away dramatically and as a result the economy was and, arguably still is, in very real danger of being wreaked. Government now needs to act swiftly to restore confidence and, as yet, it is unclear whether the new leadership are both willing and able to do so. Logic tells us that they must and let hope they do, very quickly.
Why is his of immediate importance to destination management, tourism and the visitor economy? Whatever the government now do or don’t do, both the supply and demand sides of “hospitality” have in the last week had the stuffing knocked out their already fragile confidence. That knocking is in all likelihood, going to continue for days, weeks or even months. Confidence while typically quickly lost, can and will take many months to slowly recover, even if the underlying concerns on the supply and demand sides are immediately and totally resolved or even prove to be entirely groundless. Neither of which is of course likely to prove to be the case in full.
Lack of consumer confidence is the enemy of discretionary spending on which many of the businesses in our sectors are often partly or entirely reliant. Tomorrow is the start of the critical for many, important for most, Christmas third quarter. Additional action to encourage and drive footfall to support business and businesses during this period may need to be considered. Equally consideration may need to be given to the likely additional impacts on and during the usually sluggish January to March period. We were already predicting that energy costs would result in curtailed trading hours and days of the week, going forward in general and many more, longer closures thereafter during the first quarter of the New Year. Understanding what product is now going to be available, when and balancing consumer expectation against product availability, is going to be particularly difficult for destination management and within that destination marketing. Nonetheless, failure to try to encourage sufficient visits and visitors isn’t an acceptable course nor, is encouraging visitors in numbers that prove to exceeds the currently levels of increasingly uncertain, off peak season supply.
Obviously the very real prospect in amongst all of this of business failures, will remains a major concern, as will the impacts on business investment and on ongoing, planned and future development.
2. Accommodation registration. On a brighter note the DCMS call for evidence on proposals for an accommodation registration scheme closed on 21st September. A week earlier we understand there had already been c 1000 responses due, we believe to encouragement among property owners and operators to respond. The final count could well be significantly higher; however, a thousand responses alone is already an unusually high number for this type of consultation. When the number of responses climbs there is the danger of “weighing” the response for or against and of the analysis becoming by necessity just a pure statistical exercise. In part this why the British Destinations’ response was designed not to fit the template and range across many other areas than those defined with it. It is high risk strategy in that the content might be ignored as being outside the scope but equally our templated response could have been easily lost, as just one other among a thousand plus comments.
The hope is that some of our often frank and sometime controversial views may have been noticed and lodged, especially around the firm belief that a failure to grip the market is reputational disaster in waiting. The responsibility for which, in very changed circumstance, will fall on the Government’s doorstep and not necessarily at the door step of the previously reticent established accommodation sector. Of equal importance, is the fact that user reviews have no role to play in encouraging and policing safety and other regulator control and that the vast majority of consumers would be horrified to find just how poorly regulator requirements are being applied, monitored and enforced in the England. Consumers aren’t indifferent to current situation but oblivious to it. That will not last and it is far better to resolve the problems now under your own terms, than have that forced on us by some particularly unpleasant circumstances or a significant incident, that could and should have been avoided.
Link to our response in the box below:
3. Butlins under new ownership. Some good news; twenty months after Blackstone acquired Bourne Leisure and ten months after they indicated an intent to sell, the iconic British brand Butlins, the Butlins operation has been bought back by the Harris family, essentially the former founders (1964) and owners of Bourne Leisure and, within that group Butlins, acquired by them in 2000.
It is only an opinion but if you wanted to see a bellwether of traditional domestic family holidaymaking falling into good hands then I couldn’t think of a safer pair than those that controlled and rebuilt the brand during the majority of the 2000s (2000-2021). The remainder of the Bourne Leisure portfolio of Haven, the UK’s largest caravan park operator and Warner Leisure Hotels continues to be nurtured and developed under Blackstone’s ownership. Although, Butlins has contracted from its high point in 1950 to 1970s, it remains a major player in the domestic market, as a whole, and it is absolutely critical within the mix of those three destinations and there surrounding regions that still host them.
The DCMS’s call for evidence on the development of a tourism accommodation registration scheme in England closes today 21 Sep 22. There is still time, just, to get a brief online response submitted and/or a slim possibility given the recent momentous events and there impacts on administrative activities, some potential leeway on online or emailed replies. No guarantee but a possibility nonetheless.
The British Destinations response can now be found on our original consultation website page at: https://britishdestinations.net/consultation-responses/open-consultations/developing-a-tourist-accommodation-registration-scheme-in-england-closing-12-sep-22/
As is often our way we have taken the opportunity to submit a far more detailed, long and wide ranging set of comments in the hope that some or all may lodge. Each comment is designed to be used or quoted standing on its own if necessary without reference to the whole response. Among the comments and opinion expressed the most critical are: the lack of visibility and consequential lack of guaranteed regulatory compliance are a reputational disaster in waiting, the blame for which in changed circumstances will now fall at HMG’s door. Airbnb’s concept of amateur provision is a dangerous nonsense as is there proposal to automatically issue registration numbers on the basis of the completion of a simple self-assessment online registration. User reviews have no part to play in ensuring regulatory safety compliance and the public rightly already assume we have a first world first-rate regulatory system and means of ensuring compliance before anyone may trade. Visibility and transparency is key and the current sharing economy accommodation sector’s deliberately opaque business model must now be effectively tackled to avoid an now increasingly overdue reputational disaster. The established accommodation industry is not itself without fault and there is an opportunity and need and a for the first time a wider acceptance amongst them to expand the proposed scheme to all providers.
We have reluctantly given caveated support for a registration scheme with light check, but indicated that licensing scheme is probably what is actually needed.
I am delighted to be able to confirm the final detail for this year’s rescheduled joint British Destinations, Tourism Alliance and Tourism Society annual conference 9.30 for 10am to 4 pm, Tuesday 15 November and announce that the event is now open for bookings.
The conference detail, programme and booking link can be accessed under the ” Annual conference 2022″ menu tab of Britishdestinations.net, or go to the page direct at: https://britishdestinations.net/annual-conference-19-march-2018/
I have also added some important and timely new research courtesy of ALVA to our research and statistic library. The report for ALVA by Scattered Clouds looks at the prospects for 2023. None of the detail should come as too much of a surprise to British Destination members, as it is very much in line with that we have been saying, sharing and predicting throughout much of this year. However, it is an excellent, detailed, consolidated and well-articulated report which, critically, properly evidences each major area of concern.
The report doesn’t set out to make any specific forecasts but rather to give insight and present the evidenced detail, needed by individual ALVA members and, by default, destinations and other businesses to make better informed decisions and plans for the coming 2023 season. As such it is a first-rate planning tool.
There is a full pdf version of the report for those needing to understand some or all of the detail and a useful summary slide deck that gives the essential overview. Both can be found within the “Research & statistics – by year” menu tab and/or as a separate item under the adjacent “+” tab of Britishdestinations.net, or go direct to the main library page at: https://britishdestinations.net/research-and-statistics/
It seemed unnecessary, almost inappropriate, yesterday to join the multitude in express my/our/your deep sadness and profound shock at the news of the passing of Here Majesty Queen Elizabeth II, after 70 years of selfless service and truly glorious devotion to the Nation. Her loss will be felt deeply by the vast majority of here citizens in the UK and across much of the world. That loss will be physically expressed and demonstrated, in particular within the UK and, especially over the coming two to three weeks, with a sharp focus on a State Funeral in London, likely to be held on 19 September 2022.
However, unnecessary, almost inappropriate it felt expressing my sadness yesterday, it now feels utterly inappropriate but totally necessary now to try to give some practical direction on the known and possible consequences of what is an unprecedented event in our working lives.
The full detail of what National Mourning means in practical terms is still to be publicly announced but it is already clear that quite properly, normal business will effectively grind to a halt on the day of the State Funeral. There will also be major disruption, especially in London and by inference the South East on the days preceding it and potential for some days after. There is also likely to be disruption in Edinburg during, an expected, brief lying in State there.
Beyond the mandated impacts there will be a host of circumstantial impacts, second order consequences and voluntary decisions being made. Many major events from sports fixture to planned national strikes have already been postponed and it is highly likely that in addition to nationally stipulated changes yet to be announced, like school closures, there will be a vast array of major and minor changes, cancellations, postponements, from major concerts through major and minor meeting, individual days out, to pensioners tea parties and much else besides.
Much of that adjustment will fall on tourism, leisure, hospitality and visitor economy in general, as the UK public at large decide what is, or is not appropriate for them to do and when, in the circumstances of such a momentous event in the history of the Nation. There will also be a rash of Civic, religious and organisational and public events, officially and, in some instances, spontaneously arrange across the Nation, throughout the coming weeks.
Today’s announcements of official National arrangements will set the tone and, I would predict, act as the trigger for a wave of formal and informal decision making, much of it concentrated over the weekend and the first few “working days” of next week. Once planned events are adjusted moved or added, it will then be primarily a matter of how the public in general decide to respond and the proportion of the public and, indeed businesses themselves, that opt for business as usual or adopt a more sombre approach. While there may have been periods of State Mourning and State Funerals in living memory which could be indicative of the potential public response, this almost certainly an event of a very different and far more significant magnitude. Other than predicting it will be bigger and more impactful than anything we ourselves have seen before, we are almost certainly entering unchartered waters.
Although, there isn’t much that can be done today to manage what are likely to be unpredictable and fast-moving changes, being aware that almost anything could and can happen in the next fortnight or so may at least help you to prepare yourselves and others for a flurry of what is oddly, already predictable but as yet still largely unknown events. Forewarned is forearmed.
Last week I circulated a note entitled, “Crisis what crisis?”, outlining concerns about the impending supply and demand side crisis for tourism and the visitor economy. In that note I said that I doubted Government would be willing or able to offer “hospitality industry” specific support as they did during the pandemic but that was not a good reason, not to press for it. Indeed, this is what has been happening during the last week or so with, various individual and groups of trade associations raising concerns and making industry specific and more general requests for support to help them through the energy crisis. A crisis that is already biting businesses hard, unlike the domestic consumer energy crisis, the worst of which is still to physically hit or truly dawn on most ordinary consumers.
My rational for suggesting that industry specific support is less likely than in the pandemic is that: there is significantly less fiscal headroom than there was two or more years ago, the scale and direct causes of the difficulties for business are outside Government’s own direct control, there isn’t a direct causal link to the industry’s immediate problems with any Government policy/edicts as there was with the pandemic (we the Government are closing you down from to), the problems faced by “hospitality” on this occasion are pretty much common to every other industry sector and, it is now increasingly likely that the key players in Government, the PM and the Chancellor, could/will be entirely different people, with a potentially differing outlooks on how to bring about urgent economic change.
That said, I do need to clarify, that I was not suggesting for one moment that I think that there will be no general business support, for example, a business energy cap. Indeed, quite the opposite, I think that there absolutely has to and will be urgent measure brought in to support all businesses, within days of next week’s appointment of a new PM. Whether those measures prove to be sufficient in their own right, or critically sufficiently flexible to meet our industry’s many peculiarities, remains to be seen.
For these reasons, that it is vitally important that the component parts of tourism and the visitor economy continue to press for targeted measures like: a return to a reduced hospitality VAT rate, further business rate holidays for hospitality and leisure businesses and renewed leeway on when any outstanding tax bills must be settled. We may yet get special treatment. Equally it’s conceivable that some or all of these measures we propose could be picked up and offered to some or all businesses as a lifeline, regardless of sector. Either way our industry benefits.
I firmly believe that the case for special treatment stands or falls on a proper understanding of the differing seasonal demands, of differing component parts of our industry and the importance of the festive season bounce, in an otherwise long, dark and often difficult winter off-season from November through to the end of March. It is the arguments around why we need special support, rather than on what specific support is need that I think we and broader destination interests should now be focusing our main efforts on. The what is needed, is already being more than adequately addressed, jointly and separately by the main business hospitality and leisure representative trade bodies, whose opinion may carry more immediate weight than ours on specific business related measures.
For a flavour of what the business trade associations are currently saying and asking for please see:
Regardless of the support we receive, I remain pessimistic about the prospects of the crisis being resolved in the near future; mitigated yes, solved no. We might not be directly involved in the conflict in Ukraine but for all practical purpose’s Western democracies and Europe in particular, due to its unfortunate recent historic reliance on Russian gas, are effectively engaged in an undeclared economic world war. Just like the ground war in Ukraine, which is part of the self-same conflict, the economic war and its consequences are in all likelihood going to grind on in one way or other for a number of years, causing all manner of economic casualties and economic collateral damage as it does so.
The alternatives are that one side or the other gives way and gives up on their claim to, or support for, Ukraine in return for an end to economic sanctions and/or free access to affordable energy supplies. Given what has gone on and the truly appalling suffering on the ground to date, that currently seems an improbable outcome. Or in the meantime, we and other parts of the Western World will have to get used to using a lot less energy and/or go elsewhere to find significant new source of supply or new and different types of energy provision to keep things burning and turning. Both could easily take just as long, if not longer to successfully achieve than it will for one side or other to eventually winning or losing the ground war.
Unlike the early days of the pandemic (or more accurately throughout it?) we shouldn’t be planning, or was it hoping for, a return to “normality” in terms of the next few months, later this year or even next year, but potentially at the very least several years hence and possibly longer. As I said in my earlier commentary regarding this new and potentially greater crisis we are facing, my advice would be: “Plan for the long-term and for the worst case and sincerely and fervently then hope your wrong”.