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.