Half of leisure and hospitality businesses expect to increase revenue (58%) and profits (52%) in 2022, according to a new survey of 250 UK-based industry leaders.
The survey, conducted by international business payments firm, Equals Money, found that despite two-thirds (66%) having a positive outlook on business performance this year, a similar number (65%) view the current economic environment as a major challenge.
Business costs on the rise
Most anticipate the current cost-of-living crisis to intensify, listing decreased customer demand (44%), a diminishing workforce (36%), and failing to meet growth targets (32%) among the expected consequences.
Over half (58%) expect their overall costs to increase further this year, with raw materials (25%) topping the list of cost increases. Just over a third of leisure and hospitality leaders report that both Covid (40%) and Brexit (34%) have contributed to a rise in their overall business costs.
The continued impact of the economic disruption on the leisure and hospitality sector makes cashflow a top concern, with 98% of industry leaders reporting they are currently dealing with the issue.
Over two-thirds (64%) have either already pivoted or are currently considering pivoting their business model to combat financial pressure, while a quarter (26%) are worried they may need to close their business.
The most common causes of cashflow problems for hospitality and leisure firms are:
• Rising energy prices (22%)
• Lower customer demand (22%)
• Late payments from customers or suppliers (19%)
• Rising interest rates (19%)
• Supply chain issues (19%)
Combating financial pressure
Most leisure and hospitality companies (95%) are currently taking measures to address financial challenges.
The top five measures are:
• Adjusting customer service level agreements (27%)
• Outsourcing key financial processes (24%)
• Relocating to another country (24%)
• Implementing new financial technology (22%)
• Using specialist accountancy services (22%)
Simon England, Managing Director at Equals Money, says:
“The survey findings reflect on the major financial obstacles UK businesses are facing – in a world disrupted by seismic macroeconomic events like Covid-19, Brexit, and the cost-of-living crisis. However, it’s encouraging to see that leisure and hospitality businesses are maintaining a positive outlook.
“These events are driving up costs for businesses across all areas – and leaders must have solutions in place to ensure maximum financial control, visibility, and security to maintain a healthy cashflow. Many businesses are yet to adopt specialised financial technologies and solutions, which could be the difference between success and struggle in the months ahead.
“Having the right tools in place to manage payments, expenses, budgets, payroll, as well as reinvesting in the finance function as a whole, will be vital for managing cashflow in the coming months. With a proactive approach, leisure and hospitality business leaders can build resilience, get ahead of the competition, and ultimately overcome adversity to maintain a positive outlook throughout the rest of 2022.”