Northern Ireland Hospitality Outlook in 2023
After a turbulent few years, what can hospitality leaders expect in 2023?
We don’t develop courage by being happy every day. We develop it by surviving difficult times and challenging adversity.
Barbara De Angelis
During 2021 and 2022 I watched in wonder as the Northern Ireland hospitality sector faced and overcame adversity in the post-lockdown landscape. The re-opening of hospitality in May 2021 brought many challenges as businesses struggled to adapt to the new operating guidelines, to rebuilding teams and meeting the demands of their returning customers. I have witnessed first-hand the resilience and courage of hospitality leaders and their teams as they have come through the post-Covid storm and I have nothing but admiration for the sector.
December 2021 brought new challenges and fears of a fresh lockdown, which although unfounded, caused consumer uncertainty meaning many customers hunkered down in January 2022.
But then we turned a corner!
Despite concerns about where the customers would come from, as international travel was slow to restart, 2022 turned out to be a good, if not great year for many hospitality businesses across Northern Ireland. The domestic market was strong from all parts of the island, North and South and the return of international travel has supported healthy average daily rates and improved occupancy rates for accommodation businesses, albeit not quite to the levels seen in 2019.
While the majority of hospitality businesses in 2022 did not see a full return to pre-pandemic trading levels, those who were agile and responsive to their new and returning customers and their changing needs, enjoyed a strong ‘bounce back.’ Hospitality leaders who had the courage (and the resources) to invest in either bricks and mortar and/or digital innovations during the lockdown period, reaped the rewards with improved service delivery and customer experiences, resulting in increased revenues.
However, 2022 also brought more mountains to climb.
First and foremost, as with all industries across Northern Ireland, hospitality struggled to recruit and retain staff in positions at all levels. In some cases, although there was sales to be had, many businesses were forced to limit trading hours or reduce services provided due to staff shortages. While Quarter 4 of 2022 did see an easing of the staff recruitment challenges, some businesses reporting more stable staffing levels, this issue remains an ongoing barrier to the sectors growth and development. Recruitment will require ongoing focus from both individual businesses and the wider industry to ensure the continued success of the sector.
Rising costs
And who could avoid the rising costs, which has become known as the ‘cost of living’ crisis? Food costs and supply chain issues caused havoc for food focused operations, heat and light costs skyrocketed and employee costs increased as the recruitment market became more competitive. Due to the Ukraine crisis and the instability brought about by the Truss government in Autumn 2022, heat and light costs continue to significantly impact business and rising interest rates on mortgaged properties will no doubt, suppress profitability. With the UK inflation rate running at 10.7% at the time of writing, managing costs continues to be an area that needs razor sharp focus from management teams, to ensure profitability is maintained.
Government support
Government provided some support with a business rate holiday in 2022-23 and the current Energy Bills Support Scheme 2022-23 provided non-domestic users with a per-unit discount on their energy bills. Moving into 2023-24 the revised Energy Bills Discount Scheme will continue to support businesses with heat and light costs (subject to a maximum discount). Local authorities continue to offer business mentoring support and Tourism NI are providing ongoing marketing support to eligible businesses (administered by Northern Ireland Hotels Federation). Tourism NI also rolled out the Covid Recovery Kick Start programme providing resources to support business in four key areas; Business Modelling, Recruitment and Talent Development, Digital Innovation and Sustainability.
As we look into the future of hospitality in 2023 what can we expect?
First the good news. After a strong, fully back to normal Christmas 2022, January 2023 may be slow to get started but I believe 2023 is a year full of opportunity and potential. Yes, there may be trouble ahead as costs and staff recruitment remain a challenge, but with the continued return of international travel, which at the end of 2022 was still well below pre-pandemic levels, the remerging corporate market, albeit in a different form and the continued growth of staycations due to the rediscovery of what we have on our doorstep (and indeed consumer awareness of their own carbon footprints), the hospitality sector in Northern Ireland can expect to continue to enjoy sustained, post-pandemic recovery.
That being said, reduced food and beverage spend due to reduced consumer confidence will cause concern for hospitality businesses that do not have additional income streams. There is no doubt that challenges remain, including ongoing staff recruitment and retention, inflation, supply chain issues and rising interest rates, inflation is expected to ease in the later half of the year. So, with one eye on the risks, now is the time to plan, consolidate and develop employee skills and get on with delivering excellent experiences and hospitality to our customers, what our industry does best.
To prepare for 2023, it is essential to take the time in January to plan.
Here are my top tips for 2023:
Develop robust budgets to understand expected income streams, supported by a concise sales and marketing strategy. Understand your key target markets and customers of the business and focus on marketing activities to retain your loyal customer base while attracting new customers – local, domestic and international.
Review of current and future pricing, informed by your business competitor set, to support revenue projections.
Project all costs based on current pricing and expected business levels
Review your Employer Brand
Consider digital innovation in your business from online booking systems to marketing platforms; there is a tool for every task
Explore what business development and marketing support is available and whether your business is eligible
Tourism NI and Tourism Ireland continue to market Northern Ireland as a destination, showcasing all the amazing, unique experiences travellers can have when visiting the island. Support is available to businesses owners if you know where to look, in the form of business mentoring, marketing support and growth accelerator programmes.
Find out more information on available funding here https://www.nibusinessinfo.co.uk/content/funding-support-growing-tourism-business
Contact us for more information.
