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Hospitality welcomes 2012 as Olympics fuel hopes for success

04 January 2012 by

The once in a lifetime opportunity presented by this year's Olympic Games and the continued staycation effect have created cause for optimism that 2012 will be a successful year for hospitality operators, according to exclusive Caterer and Hotelkeeper research.

The survey, undertaken as part of our Profiting from 2012 campaign in association with ACT Clean and People 1st, found that two thirds of operators were at least fairly optimistic that business would improve this year.

Over 300 operators were quizzed for the research, with most reporting that business had at least remained static last year. Some 33% said there had been little change, while 34% reported moderate growth and 16% said that performance had grown strongly.

Looking ahead, 54% said they expected further business improvement in 2012, although a third (30%) were less positive, saying they expected no improvement.

The Olympics was cited as the main reason to be cheerful, with half of operators surveyed predicting a positive effect on business. Though some said that tourists might be frightened off by higher prices, and that those that came may not explore beyond the south east, most said the whole country should expect to benefit.

"It's great PR for the country and will boost our profile world wide," said one. Another added: "We are not close enough to have a direct impact, but are hopeful that there will be a boost to general tourism."

Of the concerns expressed, most respondents (57%) were worried there would be no economic improvement in 2012, and 22% said they were being kept awake by concerns that they would not attract enough business to survive.

British Hospitality Association deputy chief executive Martin Couchman, said the industry should be cautiously optimistic about 2012. "The Olympic Games is clearly the event of the year though the Diamond Jubilee will also create a lot of interest," he said. "We don't know how this will translate for hospitality businesses yet, but UK tourism will hugely benefit in both the short-and long-term.

"However, the economy is still struggling, consumer spend is restricted, the future of the Euro has yet to be secured and many people in work remain fearful for their jobs - all factors that inhibit growth. We're not out of the woods yet, but 2012 has more going for it than 2011."

Robert Barnard, partner for Hotel Consultancy Services at PKF, said that hospitality was weathering the economic storm more successfully than many other parts of the economy.

He added: "The sector is facing a challenging operating environment that is unlikely to improve significantly anytime in the near future. However, hotel managers appear to have learnt the lessons from 2008/9 and are much better equipped to respond effectively this time around."

However, foodservice consultancy Horizons warned that 2012 was likely to be a worse trading year for eating out than 2011.

"Although the number of corporate failures in the UK eating out sector has been fairly small, balance sheets have been stretched during 2011, and it will not take much to see the rate of failures rise, probably as early as the first quarter," said Horizons' managing director Peter Backman.

"High street restaurant operators will continue offering customers discounts, meal deals and money-off vouchers to improve traffic, which will depress their profit margins."

Hopes for 2012 graphs
Hopes for 2012 graphs

Investment is vital for hotels during 2012, says HVS >>

Holiday Inn announces £20.12 room rate to mark Olympics >>

Hoteliers fret over Olympic room allocations >>

By James Stagg

E-mail your comments to James Stagg here.

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