ROAD TO RECOVERY?

Road to recovery? BUILD YOUR FAMILY BUSINESS ON STRONG FOUNDATIONS Meet Family Business Connect, our new 360° business review service that’s designed like a house. With rooms relevant to you and your business, we’ll guide you through the house helping you unlock your full potential. Talk to us about arranging your initial Family Business Tom Roach is a partner in the Truro office of PKF Francis Clark with expertise in the tourism and leisure industries.

Succession And Options

Remunerating Family

Risks to the Business For the hotel industry, 2022 was the first Easter many leisure facilities were able to open in three years following truncated openings and unscheduled closure periods having put huge pressure on businesses and their staffing requirements during the pandemic. The tourism industry continues to face many opportunities and challenges in 2022 and at PKF Francis Clark we undertake benchmarking for bed nights and room nights to provide us with insight on the industry. Comparable data shows that occupancy was up over the summer period in both 2020 and 2021 and from July 2021 to December 2021, occupancy versus 2019 was up by 9.7%. From August 2020 to October 2020, occupancy was up by 7.7% on the same period in the previous year. The significant support provided to the sector to overcome some of the challenges it faced is being tapered out and by the start of the main 2023 season will be completely removed. VAT reductions have now ceased, and business is returning to normal, albeit with potentially higher staff sickness and difficulties recruiting generally. Helpfully, 50% rates relief has been extended to April 2023, which for many tourism businesses should equate to as much as 2.5% of turnover.

EMPLOYMENT

Staffing has become a common discussion point in the sector and this is a

conversation which looks set to continue into the main 2022 season. With staff shortages expected to remain and many businesses focusing on recruitment, what should you be aware of? • The hotel industry employs a considerable number of workers from the EU and Brexit has had a significant impact on the industry. Obtaining the appropriate documentation to employ overseas staff, housing and working hours needs careful consideration • The interaction between limitations on rent charges for living wage purposes and benefit in kind rules can be difficult to navigate • Staff incentive plans have become common, although the mainstream tax incentive schemes are not available in the accommodation sector

We are often asked for advice on accommodation and benefits in kind and recently our conversations have been focused on the essential provision of accommodation for staff.

INFLATION RISES

Inflation has arrived and is set to continue into 2022/3. When open last year, many accommodation providers benefited from a limitation on supply which drove prices. However, with energy costs increasing, wages continuing to rise and the impact this has on food and services, it is likely a lag in cost increases compared with tariff rises will catch up later into 2022

and potentially overtake the previous tariff increases.

STAYCATIONS TO CONTINUE

With travel restrictions in 2021, the south west became one of the most popular holiday destinations, with holiday makers choosing to visit rather than travel abroad. To some extent this is expected to continue, especially whilst news about travelling abroad remains negative.

PLANNING THE FUTURE

Investment plans, opportunities to purchase, sell or develop are clouded by poor returns on other investments and difficulty in obtaining a normalised trading position and therefore an expected return on investment. Input costs are adding to this difficulty. Looking at opportunities to reorganise ownership and optimising family business structures are likely to become more prevalent.

WHAT ELSE TO BE AWARE OF IN 2022?

The pandemic had a substantial impact on the way businesses embraced technology, with it set to grow in 2022. Technology was seen as a way of improving overall customer experience as well as making processes easier when businesses are short staffed, such as through virtual experiences and contactless check-ins. With many businesses now implementing hybrid working, an increase in B-leisure trips (extending business trips for leisure), health and well-being trips and long weekends away are set to increase. Companies will likely look to get staff together probably for short breaks from previous traditional office environments. Not only these, but many are looking for personalisation to enhance their travel experience. This could be anything from simply welcoming them by name when they arrive, tailored packages that could enhance their experiences or using technology to capture data to record consumer preferences, birthdays or anniversaries. Sustainability continues to be prevalent in the leisure and tourism sector and as well as a consumer’s desire for businesses to use local produce, they will be paying more attention to what else a business does. For example, how do they get rid of waste and how do they communicate?

The tourism industry continues to face many opportunities and challenges in 2022

HOW CAN WE HELP?

The leisure and tourism sector will continue to face many challenges in 2022 but there are still opportunities for businesses to innovate and grow. Whatever the size of your business, whether it’s part of a group or independent and family run, we have a team of specialist accountants in the sector who can help you.