By Katie Deem, Head of Hospitality, Leisure & Travel at 4C Associates.
Katie is a seasoned procurement leader Drawing on her extensive expertise in procurement and the Hospitality and Leisure sector, Katie outlines how businesses can adapt and thrive under the Labour Government’s transformative new policies.
The hospitality industry is at a critical turning point.
With the Labour government introducing transformative policies – ranging from wage reforms and workers’ rights to sustainability targets and local recruitment mandates – the way businesses operate is about to shift dramatically.
This is a pivotal moment for the hospitality and leisure sectors and proactively planning for change and embracing innovation will not only help businesses comply with new regulations but also position them for long-term growth.
So, how will these changes impact your business? More importantly, are you prepared to turn these challenges into opportunities?
Here’s a breakdown of what’s coming, what it means for you, and how you can stay ahead.
Workers’ Rights
Labour’s commitment to enhancing workers’ rights is set to reshape employment practices – from scrapping age-based minimum wage bands to limiting zero-hours contracts.
Key Changes
Minimum Wage Reforms: Labour plans to eliminate age-based minimum wage bands, introducing a single, higher rate for all workers regardless of age.
Zero-Hours Contracts: New legislation will impose restrictions on zero-hours contracts, prioritising fairer employment terms and predictable working arrangements.
What It Means for Your Business
The Upside: Improved pay and job security can boost employee retention, cut recruitment costs, and enhance the sector’s reputation, attracting skilled workers and building customer trust.
The Challenge: Rising labour costs will place pressure on already tightened margins, especially for smaller operators. The restrictions on zero-hours contracts may also disrupt operational flexibility, requiring more fixed staffing patterns to avoid inefficiencies and resource strain.
How to Prepare:
Plan Proactively: Evaluate your staffing models and implement predictable schedules to ensure you’re covered during peak times without overstaffing during quieter periods.
Adjust Budgets: Factor higher wages into financial planning and refine pricing strategies to protect margins while remaining competitive.
Communicate Clearly: Keep staff informed about upcoming changes and engage customers early on to maintain trust and transparency as you adapt to new standards.
The Skills Gap
A greater emphasis is set to be placed on local recruitment and upskilling to address talent shortages while reducing reliance on immigration.
Key Changes
Local Recruitment Focus: New policies will prioritise developing a resident workforce to fill skills gaps across industries.
Upskilling Initiatives: A push for targeted training programs aims to elevate skill levels, creating a more sustainable and skilled talent pool.
What It Means for Your Business
The Upside: A stronger focus on workforce development can improve customer service, reduce turnover, and create a more stable and engaged team; while investing in upskilling also positions businesses as more desirable employers.
The Challenge: Training programs come with a cost that may strain smaller businesses, especially those with tight margins. Recruitment timelines may lengthen as businesses align hiring with local talent availability, and the skills gap could persist if training doesn’t keep pace with industry needs.
How to Prepare
Invest in Training: Align development programs with business objectives and ensure they support long-term growth.
Leverage Technology: Boost efficiency with tools like automated booking systems.
Expand Recruitment Channels: Broaden your approach with digital campaigns, community outreach, and employee referrals to attract diverse local talent.
Worker Shortages and Hiring Complexities
The potential reintroduction of the Resident Labour Market Test (RLMT) will see local recruitment prioritised, requiring businesses to exhaust domestic hiring options before seeking international talent.
Key Changes
Local Recruitment Mandates: Businesses may need to demonstrate efforts to hire locally before pursuing international candidates.
Stricter Compliance Measures: Increased penalties for non-compliance will heighten the need for transparent hiring processes.
What It Means for Your Business
The Upside: Strengthening ties with local communities can improve employee engagement and contribute to regional economic growth. Increased consumer confidence may boost spending on leisure and dining, whilst predictable tax policies and reduced borrowing costs can support expansion.
The Challenge: The reduced access to international talent could create skill gaps and limit flexibility and impact operational efficiency, especially during peak periods.
How to Prepare
Revamp Recruitment Practices: Highlight career growth opportunities and unique benefits in job ads to attract top local talent.
Streamline Hiring Processes: Adopt technology to reduce delays and manage compliance effectively.
Plan for Flexibility: Develop strategies that balance long-term staffing needs with seasonal demand fluctuations.
Secure Savings: Renegotiate contracts to lock in favourable terms.
Reinvest Strategically and Expand Smartly: Consider upgrades to technology, locations, or services and use economic stability to explore growth opportunities.
Sustainability
Labour’s drive for sustainability, including stricter regulations on carbon emissions and supply chain practices, is set to reshape the way hospitality businesses operate.
Key Changes
Tighter Environmental Standards: New policies will require businesses to adopt greener practices, with a greater focus on reducing carbon footprints.
Supply Chain Accountability: Greater emphasis will be placed on sustainable sourcing and traceability.
What It Means for Your Business
The Upside: Early adoption of sustainable practices can enhance brand reputation, attract eco-conscious customers, and deliver real cost savings in the long-term.
The Challenge: Initial investments in green technologies and compliance measures may strain resources, particularly for smaller operators.
How to Prepare
Lead the Charge: Offer eco-friendly options and communicate your commitment to sustainability.
Optimise Supply Chains: Implement tools to monitor and improve sustainability across sourcing and logistics.
Set Clear Goals: Define measurable sustainability targets to track progress and showcase your commitment.
Support for Pubs
Labour’s commitment to cutting draught beer duty by 1.75% and reforming business rates offers a lifeline to pubs and breweries, helping to preserve these vital community spaces.
Key Changes
Draught Beer Duty Reduction: A 1.75% cut aims to ease financial pressures on pubs and breweries.
Business Rates Reform: Changes to business rates promise fairer taxation for hospitality venues, potentially reducing overheads.
What It Means for Your Business
The Upside: Cost savings can be reinvested into renovations, expanded offerings, or marketing to attract new customers. Community ownership schemes could also help secure the future of local establishments.
The Challenge: Competitive pricing pressures remain, and smaller pubs may struggle to fully capitalise on reforms without additional support.
How to Prepare
Reinvest Strategically: Focus on upgrades that enhance customer experience, such as improved facilities or expanded menu options.
Advocate for Change: Collaborate with industry groups to ensure continued support and secure long-term policy benefits.
Preparing Today for Tomorrow’s Challenges
The Labour government’s ambitious policies are poised to reshape the leisure and hospitality sectors, but by acting now, you can mitigate challenges and seize opportunities for growth to drive your business forward.
