There are tough times ahead, but hang in there…
Over the past 12 months thousands of words have been written about the terrorist attacks in the USA. A year later there is a patchy economic recovery, but the memories remain and the shock factor still evokes strong emotions.
No one could have foreseen the impact that those events would have across the world. Businesses of all types have suffered, and hospitality operators in particular. All agree that it's been a tough year.
Hotel companies have suffered from falling occupancy, and across the board it's a case of reduced profits, as our news stories over past weeks have shown. Even destinations such as Australia, which seemed "safe" from terrorist attacks because of their remote location, have had to face dwindling visitor numbers.
And just as it seemed as if a slow recovery was taking place, there's another situation to contend with. The bigger picture of war on terrorism is now emerging as the drumbeat for military action against Iraq gets louder.
If Iraq refuses to comply with UN resolutions and readmit UN inspectors, then action seems likely. And there can be little doubt that if that situation arises, we in this country will be standing shoulder to shoulder with the USA.
It's hard at this stage to predict what effects on business and consumer spending patterns war with Iraq would bring. Gloomy pundits will foresee escalating oil prices and economies in free fall, and they may well be right. Others may prophesy that successful action against Iraq could lead to bull markets, as it did during the Gulf War of 1990-91, although that situation was followed by recession in both the USA and the UK.
What seems certain is that the threat of war will have a negative effect on business confidence, and it is this point that operators should note. Business and life must go on as usual, but given the uncertainty that action against Iraq would create, it would be prudent to suspend unnecessary capital expenditure and scrutinise hiring decisions for the short term at least.
Over the past few months many operators have shifted their business mix to concentrate on the domestic market and markets closer to home, rather than putting their eggs in the more volatile US and Middle Eastern baskets. Continuing this pattern seems sensible, even though it could be tough going. Domestic marketing will need to be aggressive as there is a strong likelihood that consumers will react to the uncertainty by tightening their belts, spending less and saving more.
This may sound like doom and gloom, but don't lose heart. The hospitality industry has been through hard times over the past couple of years and learnt many lessons in the process. Those lessons - such as spreading risk, reviewing operations and not making rash decisions - can be put into action now. And be sure to e-mail us (chot@rbi.co.uk) to tell us how you are weathering the storm. A problem shared is, after all, a problem halved.
JENNY WEBSTER
Deputy editorCaterer & Hotelkeeper
