Hospitality, leisure & tourism

Hospitality, leisure and tourism businesses are affected by lower business confidence and GDP in the wider economy – as companies may restrict spending on travel and hospitality. At present, business tourism accounts for a quarter of all visits to the UK, and business visitors spend an average of 50% more than leisure visitors on hotels, restaurants and events [1] . Companies in this sector also rely on thriving rural economies, and are reliant upon aviation, real estate, maritime, road and rail infrastructure within the UK and without. The food and drink sector is also of importance.
Driven mostly by the depreciation of sterling, some areas of the UK's hospitality, leisure and tourism sectors have seen a small boost in interest over the past few months [2] . The increased cost of foreign holidays for UK residents and decreased costs for visitors from abroad mean caravan parks, seaside towns and cultural attractions embrace more visitors. But the industry is complex. This can be to the detriment of British providers of package holidays abroad, financial services supplying travel insurance and retailers selling everything from sun cream to ski equipment. Overall, it is not a beneficial effect experienced by the vast majority of firms.

Key stats

  • 3.1 million employees
  • £121.1 billion of GDP (7.1% of total GDP)
  • £22 billion exports (overseas residents visiting UK)
  • £42.4 billion (UK residents' visits abroad)
Regulations: There may be new opportunities for more flexible regulation, but not at the expense of quality

Once the UK has left the EU, there may be opportunities for more flexible domestic regulation that better reflects the needs of the hospitality and leisure industry. These will have to be balanced with areas of harmonisation that support both UK and EU businesses in this sector, including mutual recognition of drivers' licenses and qualifications in diving and skiing. Additionally, areas of consumer protection are currently legislated for by the EU. Many businesses have indicated the need to keep levels of protection for consumers high to give visitors the confidence to travel to the UK.

Migration: EU workers play a vital part in the industry, and ease of movement of visitors is crucial

Any immigration system that the UK adopts in future must take account of the needs of sectors experiencing skills gaps and labour shortages. Prior to the referendum, 42% of vacancies in the hotel industry were recorded as hard to fill, 38% in restaurants, and 28% in the tourist service sector [3] – with difficulties recruiting for occupations as varied as chefs and cleaners. As companies can struggle to hire British workers, an estimated 25% of employees working in hospitality and leisure are migrant workers – including 700,000 from the EU [4] .

The UK's reputation as a place to visit is also important to businesses in this area, which includes its position as a welcoming environment and ease of travel – particularly with regard to Ireland.

Exit: A new funding deal for the rural economy must include consideration for this industry

€2.6billion in CAP funding currently directly supports rural services, SMEs, tourism, and cultural and heritage activities, alongside €25billion that funds farmers and environmental schemes which make it attractive for visitors [5] . This figure for the years 2014-2020 should be viewed in the context of national public funding of tourism, which was around £84million this year [6] .

Our members say

"We are an outdoor location with a mostly local audience, so the important thing is that residents still have disposable income." - independent wildlife park

"We already struggle vastly to attract across the business for all positions. Any attempt to restrict this will have devastating effects on us and the industry as a whole." - independent hotel business

"Leaving the Common Market would be very bad for our industry. Europeans come to Northern Ireland for their holiday. Out of the EU, there would be travel restrictions and all sorts of issues that would not be helpful in our industry." - small hotel chain based in Northern Ireland
Our partners have more information:
  • British Beer and Pub Association
  • British Holiday and Home Parks Association
  • Country Land Association
  • Tourism Alliance

For hospitality, leisure and tourism at the CBI, contact: Polly Haydn-Jones on 0207 395 8182 or Polly.HaydnJones@cbi.org.uk


References

[1] Tourism Alliance, UK Tourism Statistics 2016

[2] British Hospitality Association, November 2016 Travel Monitor

[3] People 1st, The skills and productivity question

[4] British Hospitality Association

[5] Tourism Alliance, CMS Select Committee Inquiry on Brexit

[6] Tourism Alliance, CMS Select Committee Inquiry on Brexit

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