While the pandemic has affected the whole economy in ways unimaginable just over 12 months ago, the hospitality and tourism sector has been among the worst hit. It has faced some of the toughest lockdown restrictions, which have been highly destructive – and sadly in some cases fatal – for businesses which thrive on social interaction, explains Richard Hurd-Wood, CEO of Virgin Experience Days.
For example, the retail industry is an important part of the economy, comprising almost 5.1 per cent of UK GDP. But in 2020, total retail sales volumes fell by 1.9 per cent compared with 2019, the largest annual fall on record. Additionally, the travel and tourism industries contributed 6.7 per cent of all gross value added in the UK in 2018, but took a hit as monthly air passenger arrivals to the UK fell from 6,804,900 in February 2020 to 112,300 in April 2020, a fall of 98.3 per cent.
But out of the gloom, there is some hope. The reopening of the hospitality sector on the 12th April was the start of a lockdown roadmap that is intended to return us to normality by the end of June. But challenges remain in the interim and will persist even after all restrictions are relaxed. Businesses must prepare themselves for an indefinite period of measures intended to protect the public and adapt to what politicians have coined the ‘new normal’.
Learning From The Past
As the UK was put into lockdown, providers showed fantastic dynamism, creativity and resilience to pivot in challenging circumstances. Those that kept the essence of what made the real-world experience special – whether via the product or execution – performed particularly well. For example, there was soaring interest in cocktail masterclasses from home, make-your-own candle and chocolate kits, as well as plenty of whisky and wine tutored tastings people could share with family and friends.
Those who were successfully able to capitalise on the rise in demand for digital-first experiences performed well. The transition towards online and home delivery was already in motion before the pandemic; a mix of virtual experiences were already available pre-lockdown such as online escape rooms and learning new skills from home including photography and cooking. However, the shift in focus during lockdown undoubtedly led to a diversification in the digital offering in the market.
The virtual and home delivery options proved popular across many product categories and helped some businesses to survive and even thrive in difficult circumstances. However, with the hospitality sector now reopening, consumers are showing great eagerness to support local businesses and enjoy experiencing familiar brands in a different way – a more normal way.
Navigating The Present
Since the easing of lockdown restrictions, there has been a huge appetite among the public to rediscover traditional experiences. With only outdoor experiences currently possible, searches for Kew Gardens rose by 128 per cent annually since the lockdown roadmap was announced; searches for zoos increased by up to 46 per cent year-on-year and sales of hot air balloon experiences are up 77 per cent against the same period prior to the
But, with ongoing health and safety measures necessary, such as hand sanitisers, facemasks indoors and social distancing, the experience may still feel some far from normal for consumers and this will be a challenge that the retail and hospitality sector will need to overcome.
After 12 months of restrictions and the constant reopening and closing of facilities, some consumers will understandably be cautious about returning to hospitality venues so quickly. Businesses will not only need to contend with the additional costs associated, but the sector will also need to reassure customers with clear and transparent hygiene policies and safety measures.
Preparing For The Future
While some businesses are enjoying their newfound freedoms, it’s important to remember that many businesses are still closed either due to the ongoing restrictions on indoor hospitality or through a lack of available funds. For example, only two in five pubs have so far reopened. Some of the restrictions are due to ease on 17th May and again further on 21st June. So, what can those businesses which are currently shut learn from those which are currently open either partially or fully? And what can they do to prepare?
If there are any positives to come out of the pandemic for the hospitality and tourism sector, they are the popularisation of the UK staycation and the diversification of the sector: from digital experiences and home deliveries to a rise in adventure experiences.
Additionally, the pandemic has been an opportunity for the sector to improve outdoor experiences and this has been warmly welcomed by domestic consumers who have become accustomed to al fresco dining in Soho or drinking in pub gardens in springtime temperatures in the North. Owners, developers and investors can capitalise on this by preparing their venues as Covid-19-safe but entertaining environments and transforming their outdoor spaces. These purpose-built spaces, specially made for the so-called ‘new normal’, will need to make the most of the surroundings and invest in creative improvements that stand out from competitors.
The future of the hospitality and tourism industry has never been more uncertain. But the signs are promising. We saw this in practice last summer when social restrictions were relaxed on 4th July. The rise in staycations and government measures, such as the Eat Out to Help Out scheme, restored consumer confidence and resulted in UK GDP growing at a record 15.5 per cent in Q3 2020.
This year, the “huge pent-up demand” predicted in December by Andy Haldane, Chief Economist of the Bank of England, is already beginning to bear fruit. The hospitality sector is already seeing some of the benefits of the £250bn of “accidental savings” amassed by the British public. Earlier this month, spending on credit and debit cards rose by 10 percentage points to 88 per cent of its pre-pandemic average, according to the Office for National Statistics (ONS) and retail footfall increased by 9 per cent in the same week. Meanwhile, a Barclaycard report found that consumer spending on leisure and entertainment rose by 136 per cent. But hospitality and tourism businesses can’t afford to simply assume customers will return in the same way that they did before the pandemic. They must learn from the lessons of the past 12 months, adapt to the present restrictions carefully with the customer’s safety in mind, and plan for a future that looks very different.