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The Latest Hospitality and Leisure Trends: 2021

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It’s been a difficult year for the hospitality and leisure industry. Local and national lockdowns have placed immense pressure on the industry and forced them to close their doors, then reopen, then shut once again at the drop of a hat. During this time, those in the leisure and hospitality industries have proven themselves to be incredibly resilient. Many have pivoted their business strategies; offering everything from takeaway pints, coffee and roast dinners to online workout sessions, pamper-at-home packages and even offering up their accommodation as quarantine sites.

The financial and emotional strain that this has put on business owners should not be taken lightly and, even with the roadmap out of lockdown laid out, there’s still an undercurrent of uncertainty for businesses in this sector.

So, what exactly does 2021 hold for the future of our much-loved, and missed hospitality and leisure organisations?

The impact of Covid-19 on the hospitality industry

Since the onset of the pandemic, it has become evident that businesses operating in the hospitality and leisure industry have felt the impact the hardest. Due to the lockdown restrictions, the turnover for these businesses has been severely disrupted, with figures showing an economic output decrease of 92% when comparing April 2020 to February 2020.

Ongoing fixed costs and accumulating debt, combined with persistent low revenues and low cash reserves have been noted as a major concern for the sector. In an attempt to recover trust and support small businesses, the Government introduced the Eat Out to Help Out Scheme (EOHO Scheme) in August 2020. During the rollout of the scheme, an impressive £849 million was claimed across 78,116 outlets amounting to over 160 million individual meals, though output levels remained below pre-pandemic levels.

As September arrived, a rise in COVID-19 cases and national and local restrictions were reinforced, the sector felt the squeeze once again as hospitality venues were forced to shut their doors once more, throwing the industry, business owners, and employees, back into a phase of instability surrounding jobs.

The ONS has reported that as of December 2020 59% of hospitality businesses were still trading, compared to 84% in all other industries. The report also outlines that 41% of hospitality businesses had temporarily paused trading, compared to 13% across all industries. This stark contrast emphasises the severity of the situation for the hospitality industry.

When comparing the number of jobs in the sector between January to March 2020 against July to September 2020, the figures had fallen by 6% (147,000). Despite this, the coronavirus crisis has not yet resulted in the expected increase in unemployment, which can be partly attributed to the introduction of the Coronavirus Job Retention Scheme (CJRS).

Further to this, the number of furloughed workers within the food and accommodation sector reached its highest levels on 10th April 2020, with a recorded number of 1.6 million. Since then, these numbers have continued to decline. On 31 October 2020, 27% (601,400) of eligible food and accommodation jobs were furloughed under the CJRS, compared to 8% across all industries.

The hospitality industry made good use of business support schemes that were introduced by the UK government, such as the CJRS and business loans. In addition to this, initiatives aimed at helping the industry such as the Eat Out to Help Out Scheme, small business grants, reduced VAT rates and a business rates holiday for the 2020/21 year has all been welcomed by the sector.

According to information from Statista, as of August 2020, around 65% of UK businesses in the food and accommodation sector had experienced a year on year decrease in footfall as a result of the pandemic.

Despite this, Statista also found that for approximately 10.6% of businesses in the industry, footfall had, in fact, increased, suggesting that there is some light at the end of the tunnel for our much-loved hospitality venues.

The impact of Covid-19 on the leisure industry

March 2020 saw the first lockdown imposed across the country. People were urged to stay and work from home and many non-essential retailers were forced to suspend their operations, as only 19% of high street units were classed as essential and therefore allowed to stay open.

Businesses in the retail sector came under threat, with the sudden disruption of activity, came with it a knock-on effect on the commercial real estate sector. With 42% of high street retail and leisure units having filed for administration following the lockdown restrictions – highlighting the severity of the issue.

Not for profit organisation, ukactive, reports that the winter lockdown will cost gyms, swimming pools and leisure facilities across the UK a combined £90m a week in lost revenue.

Information provided by PriceWaterhouseCoopers (PWC) shows that in 2019, the sport and physical activity sector was one of only two sectors that displayed net growth on the high street. Having contributed £16 billion to the UK economy and adding £72 billion in social value, proving the sector has enormous potential to support the nation’s economic growth in the future.

Consolidating this point; SportEngland reports that since 2010, employment in this sector has increased by 9% and consumer spend on sport and physical activity has risen by 7%. Gyms and physical activity centres help to encourage consumers and footfall on the high street whilst championing a healthy and active lifestyle.

As the first national lockdown ensued, these facilities were forced to close and withstand a period of no income whilst also having rental payments to upkeep. Additionally, unsuccessful insurance claims and delays with rolling out furlough funds meant that this sector has felt the impact of the pandemic more keenly than some others. As an example of the impact of COVID-19, leisure operators lost 25% of their yearly income and 1 in 5 of their members during this time.

When leisure facilities were able to reopen at the end of July 2020, many gym goers were very concerned about safety and hygiene and many venues found that membership numbers continued to decline. Lost visits to gyms and leisure facilities are predicted to total £746 million by April 2021 as a direct effect of lockdown and social distancing rules, hindering the sector’s business continuity and long-term financial sustainability.

Hotel occupancy levels in 2021 are expected to sit at 55% across the UK, and it is forecast that it could take four years to return to pre-pandemic figures. The industry had previously seen consistent growth over the last decade and this trend is of concern for both hotels and the hospitality industry in general.

In order to recover from this depends on a vaccine that is widely available and administered in a timely manner in addition to the growth in public confidence to travel and therefore require the use of a hotel.

The future of hospitality and leisure

The future of hospitality and leisure post-pandemic is set to include some big changes. It is predicted that a rise in the use of technology, chatbots and contactless solutions for customers will be among some of the factors that will shape what the coming months, and years, will look like for businesses within the hospitality and leisure sector.

Preparing for heightened demand

In terms of trends that have been accelerated by the pandemic, research by PWC has found that retail parks and small towns are fast becoming places that consumers want to visit and shop in. The emphasis on shopping locally, heightened by the pandemic has given independent retailers the potential to thrive.

Factors determining whether retailers have been successful have not changed since last year, with the main drivers being convenience, discount, value retail (that cannot necessarily deliver their service online) and local services such as repair shops.

Convenient leisure has rocketed, with takeaways, coffee shops and cafes all showing successful growth. Drive-thru coffee shops and coffee shops in retail parks or out of town locations have balanced out the loss of coffee shops in city centre units.

As expected, hospitality and leisure were amongst the top closures and in many cases, this has been triggered by CVAs. However, the closures we are seeing right now are not just as a result of COVID-19.

A large proportion of the impact we’ve seen this year is in fact a reflection of factors that were at play before the pandemic hit. This includes changes to the ways in which consumers shop, legislative changes, consolidation due to previous overexpansion and chainwide closures for businesses that were already facing closures before the onset of the pandemic.

It is true that the pandemic has had a huge impact on store openings and closures this year, but the full extent will likely come to light over the course of 2021.

According to the same report by PWC, a number of the CVAs and administrations for 2021 are still to be captured, including department stores, fashion retailers and hospitality operators – all of which will leave empty space in city-centre locations. In order to not be surrounded by vacated shop fronts, retail and leisure businesses must consider action to ensure they are in the best location to attract footfall.

The sector welcomed the extensions on VAT relief and business rates holidays, as part of the Chancellor’s 2021 budget. Time will determine whether this will drive down closures in the sector, but it should give many businesses the chance to at least benefit from a busy summer and Christmas period.

As a bottom line, there will be growth opportunities for businesses and gaps will begin to emerge. Just as the global financial crisis paved the way for discounters and foodservice supply chains to replace other retailers – those who are placed in the right location and are able to take advantage of the gaps that have formed, are in good stead to thrive, regardless of the uncertainty, we may face in the future.

The lifting of restrictions will turn suppressed demand into a huge opportunity for hospitality and leisure firms. As became clear for bars and restaurants when they reopened after the first lockdown, consumers have a ravenous need for some form of normality in their everyday lives, which is often provided to them by the sector.

As restrictions begin to lift again throughout this year, it is anticipated that the hospitality industry will once again play a central part in people’s lives, as Reed Hospitality & Leisure Expert Sam Baldwinson explains:

“The enforced closure of venues will likely heighten demand when things return to normal, with people relying on the hospitality sector to put a smile back on their faces – whether that be a quiet dinner date, a night out with friends or other special occasions.”

Intellectsoft’s report states that the new norm will be determined by three critical capabilities: flexibility, creativity, and resilience.

So, how can the hospitality and leisure industry respond to new demands?

Contactless interactions

Some hotels had already implemented contactless interactions before the pandemic, harnessing the power of technology to enable customers to offer guests the option of contactless checking in and out.

This is made possible with mobile apps and NFC (Near Field Communication), which have the capability of notifying hotel staff when their visitors will arrive so that they can ensure the room is prepared and ready on time.

Contactless check-ins and check-outs can save a lot of time for guests as there is no need to wait in line to be seen by reception staff. Less waiting times can therefore increase the level of guest satisfaction and lead to an overall positive opinion of the venue.

Currently, the biggest hospitality trends are focused on reducing physical contact, meaning contactless payments have soared in popularity. Contactless payments save time, by taking away the need to sort through cash or enter a PIN. In addition, the rise in services such as Apple Pay and Google Pay also remove the need to even carry a wallet.

As a result of the pandemic, many customers and staff may feel uncomfortable handling cash and providing the option for contactless payments is now deemed to be necessary.

Increase safety and hygiene

Naturally, customers will be paying more attention to the safety measures and hygiene within hotels and accommodation as the worldwide pandemic is not over yet. So, these concepts should be a priority for hotels and restaurants. A study by McKinsey showed that more intense room cleaning (e.g. UV light disinfection) was one of the main actions that respondents believed hotels should be doing more of as we move forward.

As the industry adapts to the fallout of the virus, whilst containing the spread, it is essential that increased safety measures are top of the agenda for hotels, restaurants, bars and cafes.

This could involve providing hand sanitiser, cleaning areas more often and thoroughly, introducing policies on wearing masks or other protective equipment and enforcing social distancing. Any special or specific rules should be clear and well communicated to staff and visitors.

As well as this, it is important that businesses in hospitality are using their marketing efforts to highlight the safety and hygiene steps they are implementing – as this could ultimately be the deciding factor for prospective customers.

M8group estimates that gyms, spas and studios will have to allow an additional 30-40% of space to accommodate the personal distance in order to make visitors feel comfortable.

They echo that COVID-19 has made the public more aware of cleanliness and ventilation, meaning facilities will need to ensure rigorous hygiene standards to maintain customer confidence.

Group training sessions are expected to bounce back but may initially be met with reluctance as people aim to avoid large classes in tight spaces. Gyms must consider their layout, ventilation measures, cleanliness and air quality as they introduce group classes back into their offering in order to attract and maintain customers.

Embrace technology

Digital transformation is a priority for UK based CEOs, with 77% of respondents saying they plan to invest more into digital transformation, following on from the disruption of COVID-19.

Throughout the pandemic, most organisations found that technology was essential for them to survive and businesses that were already embracing technology set the precedent on how it should be done.

The leisure industry, like many others, has adapted its operational strategies to introduce a hybrid model through the use of technology. The pandemic forced the hospitality and leisure industry to be where the customer is – at home. This saw a shift into providing home-based services such as on-demand releases for new movies and for hospitality, pivoting bars and restaurants into a takeaway/delivery-based model. By relying more on streaming services and remote delivery applications, both sectors were able to lessen the impact of the pandemic on their operations.

Providing a service that can be enjoyed from home poses a great opportunity to engage with consumers: TV, social media, messaging services and video games are all on the rise.

Online entertainment has skyrocketed in popularity and we’re seeing more virtual live performances than ever before. Virtual theatre productions and live broadcasts are also becoming widely available.

Unsurprisingly, streaming services such as Netflix or Disney Plus are seeing huge growth in demand, the BBC report that Netflix had 16 million new sign-ups during the first lockdown.

Chatbots

A chatbot is a useful tool that interprets and processes a user’s words or phrases and then responds with an instant pre-set answer. They can live on platforms like Facebook Messenger, WhatsApp, Skype, Slack or even on your website.

Chatbots can help visitors solve issues or provide necessary information when staff are not available. Using artificial intelligence, chatbots can act like real company staff and provide an excellent customer experience.

In many cases, using a chatbot can lead to first contact resolutions, but chatbots also have the ability to gather information and pass it on to a human representative if required.

The hospitality industry will need to tackle the increased number of questions customers will have concerning coronavirus and the possible restrictions within accommodation and restaurants. Chatbots can be useful for answering the most fundamental questions in this area within seconds, helping to reassure customers and save time for staff.

Smart rooms

Smart hotel rooms are currently another popular trend in the hospitality and leisure industry. This type of hotel uses smart, internet-connected systems that allow their visitors to manage every device in their room from a single place (for instance, a mobile app controls the kettle, lighting, speakers and fridge.) This integrated functionality allows a more self-sufficient stay experience for each guest and can help reduce the need for multiple contact points, allowing greater peace of mind, particularly whilst Covid-19 is still foremost in people’s minds.

Remaining flexible

Bars and restaurants that serve food have adapted to COVID rules and regulations by increasing home deliveries, allowing customers to enjoy the food and drink they would have in a restaurant from the comfort of their own home. For bar and restaurant owners, this requires taking phone and online orders, delivering quickly and offering contactless deliveries.

A key part of hospitality management during a pandemic is finding exciting and clever ways to win over customers. In terms of food and beverage delivery, bars are experimenting with the ways they can bring drinks to customers’ houses, while restaurants are increasingly offering freebies and extras.

By nature, takeaways produce more waste because of the packaging needed to transport the food and drinks. In this case, for CSR purposes and for the good of the environment, it is encouraged to use suitable packaging that can be ethically disposed of.

In summary

To conclude, despite it being a tough year – trends show that there is still an opportunity for the sector to thrive and much of this comes down to choosing the right location at the right time. Data within many reports cited in this article indicate that there is a shift away from consumers wanting to visit city centres and that independent shops and retail parks are growing in popularity.

As the hospitality and leisure industry is set to reopen from the 12th of April this year, businesses will need to think about what they are doing to reassure the public that their venue is safe and hygienic. Those that take advantage of technology to display this and deliver great customer service will reap the benefits, as consumers show signs of paying extra money for a safer experience.

Above all, remaining flexible and adapting to the changes in consumer needs can help with placing the hospitality and leisure industry in a good position to succeed.

At Mitrefinch, we’re committed to helping you keep control of your labour costs and drive operational efficiency for your organisation, all without compromising on delivering the outstanding service your customers deserve.

For more information on how we can help, contact us today.

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Mitrefinch needs the contact information you provide to us to contact you about our products and services. You may unsubscribe from these communications at any time. For information on how to unsubscribe, as well as our privacy practices and commitment to protecting your privacy, please review our Privacy Policy.

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Mitrefinch needs the contact information you provide to us to contact you about our products and services. You may unsubscribe from these communications at any time. For information on how to unsubscribe, as well as our privacy practices and commitment to protecting your privacy, please review our Privacy Policy.

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