Most will accept that the economic challenges being faced today are as tough as have been faced for many years. Many operators are feeling anxious about Q4 and the next six months ahead. Fully understandable as these are some of the harshest conditions to face the industry for many decades.
Of course, the Ukraine war has made the economic conditions all the more challenging but regardless, this is a time of genuine change which is asking new questions of operators all across the world. The industry faces a huge range of challenges from supply to inflation to energy to how monetary policy develops.
There is little doubt that economic policy will be far more challenging and difficult than it has been since the early 1990s. The central banks do face some major challenges as the consumer is already struggling but what will happen if interest rates do rise as forecast?
It is suggested that all those on salaries of £70,000 and less will now halve the number of times which they visit hospitality outlets and this is as all stands today and before further cost increases. This is bound to have major implications on the industry as it will naturally create major changes across the industry.
However, there are signs that any recession will not be as bad as in previous times. As economists note:
- The argument is that this is an inflation driven crisis rather than about credit as was the case in 2008-9 which means that the fundamentals are potentially stronger.
- The labour market should be resilient as there is still such a demand
- The housing sector has seen 10% rises so far this year so even if it falls by the forecast 7%, it will still be stable
- The suspicion is that corporate revenues will remain solid.
However, there is still key changes taking place which is likely to see:
- Hospitality become far more polarised between those offers which attract the top 2% in society and those who appeal to mid market.
- Robotics will naturally see growth across the industry
- The industry will naturally become far stronger in its diversity and support for all talent.
- There is a stronger focus than ever on those from disadvantaged areas and providing support.
- Companies are also showing stronger care for the environment and for those which are employed.
- Consumers will continue to spend but on experiences which really do make a difference. There will be, it is a forecast, a real step up in customer experiences
- Service and care will become increasingly important and valued.
- The combination of work and leisure will become ever stronger
- Employees will return to workplaces as they seek to feel part of something which is bigger and more secure than how they feel whilst working from home.
- City centres will adapt and change as they invest more into travel systems and living accommodation.
This is, of course, all to be seen and time will tell. The one thing which is true is that the future will be very different to what has gone before.