Foot-and-mouth could be the least of your worries

03 May 2001
Foot-and-mouth could be the least of your worries

The forecasts make grisly reading. The British Hospitality Association has warned that foot-and-mouth could lose the hospitality trade £3b in foreign revenue, and another £2b in domestic earnings. Its survey of 500 hotels pointed to an average 10% drop in turnover and a 30% plunge in forward bookings, with those in Scotland, Wales and rural towns hardest hit.

In the worst-affected areas, according to the Northumbria Tourist Board, accommodation providers are losing an average £7,500 a week. Bookings are said to be down 90% in north Cumbria, and down 40% in the south of the country. South West Tourism believes the area's tourism trade lost £51m in March.

The plight of rural hotels was highlighted by the Prince Hall hotel in Yelverton, Devon, which has decided to remain shut during the summer even after emerging from a three-week quarantine.

The management fears there is still nowhere for its walking, climbing and riding clientele to go on Dartmoor.

But the confusions and contradictions that have characterised the outbreak - whether vaccination is on or off the agenda, whether healthy animals will or will not continue to be slaughtered - are beginning to appear in hospitality too and a more mixed picture of winners and losers is emerging.

Consultancy firm PKF reported last week that the epidemic was proving less damaging than expected. While London hotels have suffered a downturn, provincial properties are enjoying increases in occupancy, average room rates and revenue per available room.

And the English Tourism Council found Easter trade more buoyant than expected, with businesses reaching 70-80% of last year's figures.

Cities and seaside resorts such as Blackpool, Tenby and Saundersfoot did well over Easter. Even Windermere in Cumbria found bookings made at the last minute through Tourist Information Centres climbed by 36%.

This trend backed the view of think-tank the Centre for Economics and Business Research, which believed that two-thirds of revenues lost because of foot-and-mouth would be split between non-rural holidays in the UK and other leisure interests.

Other reasons for poor trade were underlined last week in business adviser Ernst & Young's analysis of the record number of profit warnings in all industries for the first quarter.

Foot-and-mouth accounted for just 11 of the 136 warnings (including five from food producers and one from the leisure, hotels and entertainment sector). But the weather was named as the culprit in an equal number of cases.

The role of weather was highlighted by Malcolm Bell, chief executive of South West Tourism, who saw the coming May bank holidays as a crucial test: "If the weather is poor and business isn't good, we'll never know if it was because of foot-and-mouth or the weather," he explained.

The leading reasons for the profit warnings were rising operating costs and overheads (22 warnings) and the slowdown in the US economy (15).

Gidleigh Park in Chagford, Devon, attributed a dearth of US visitors to its 25% drop in both occupancy and reservations. While it may be true that some Americans are confusing foot-and-mouth with BSE and believe UK food is unsafe to eat, the US slowdown could equally be hitting their confidence and pockets.

This view is backed by Melvin Gold, managing director of PKF's hotel consultancy services.

"We believe the US economy is responsible for much of the downturn in the London hotel market," he said. "This is particularly evidenced by relatively poor performance at the top end of the market."

Amid cries for compensation, a cautionary note has been struck by Martin Cummings, owner of Amberley Castle in Sussex. His warning that aid packages could bail out already ailing companies could be illustrated by the fate of marketing consortium Minotel, which went into administration last month.

Although foot-and-mouth was blamed as a "final blow" leading to members defecting, the organisation had had long-term problems with members complaining that revenues from bookings no longer covered their subscriptions.

While there were tentative signs this week that the worst of the crisis was over, the full effects on trade could be delayed. Ernst & Young expects foot-and-mouth related profit warnings to continue at current, or higher, levels over the next six months and anticipates a decline in tourism investment and some permanent closures, especially among small family businesses.

Source: Caterer & Hotelkeeper magazine, 3-9 May 2001

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