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FOCUS: Recipe for disaster? Jersey hospitality enters the perfect storm

FOCUS: Recipe for disaster? Jersey hospitality enters the perfect storm

Tuesday 28 December 2021

FOCUS: Recipe for disaster? Jersey hospitality enters the perfect storm

Tuesday 28 December 2021


Covid, Brexit, fast rising costs, connectivity questions, hotels closing, staff struggles... hospitality's menu of troubles is long and unappetising. And it is one that needs to be managed with little spare cash.

The industry has little option but to put on its ‘game face’ and make the best of it, which is exactly the approach being taken by the new Chair of the Jersey Hospitality Association, Tim Hubert.

The festive period and rest of the winter are going to be a tough time for the sector – but are there also opportunities to be embraced?

Express caught up with him, and began by asking him what he thought the biggest issue over the next 12 months would be...

Recruitment: There is not a business I know in hospitality, or linked to hospitality, that is not struggling to recruit staff, and this is in all areas from front, and back, of house.  The Government are looking at the current regulations on bringing in foreign labour, and will hopefully move away from the current nine-month permit to a longer term; this makes life easier for businesses and is also more attractive to incoming workers.  The labour shortage is island-wide and affecting all sectors, not just hospitality, from retail, construction, health care and finance.

Rising costs: there is going to be some hefty increases coming through in the next six months and I can see three key areas:

  • Utilities: gas has gone up 13.2% in October, and Electricity is set to increase 4% from 1st January. Jersey Water have not announced anything to date, but it is almost inevitable there will be an increase in the first six months of next year. 
  • Salaries: it has been well documented over the last 18 months about the rising cost of labour due to staff shortages because of Brexit and the pandemic.  The higher rates of pay will now become the norm. On the one hand it is good that people are getting paid a better salary but like all costs these will be passed onto the consumer. 
  • Logistics: the issues are all in the news from lack of HGV drivers, fuel price increases, grid locked ports with empty shipping containers, traffic jams out at sea with container ships weeks behind schedule, issues in the food and drinks supply chain due to staff shortages, poor crops due to climate changes.  These will all have an impact on the cost of goods which will be passed onto the consumer.

Cash flow: two lockdowns and what we now call the ‘three winters’ of hospitality has put huge strains on cashflow. I think a lot of people have forgotten that hospitality businesses were shut for 28 weeks during the period from March 2020 to March 2021, and even when they were open it was with fewer visitors and restricted trading operations.  

So yes, cash flow will be an issue for many businesses and will continue to be throughout this winter, especially for the likes of the events industry, outside caterers and others that are linked to that sector.  There are also the seasonal businesses who might have had a good summer trade but are now facing 5 months of little or no income.  The Government needs to continue their support for this winter, and potentially beyond, if we want to have a high-quality and well-invested tourism industry which benefits both locals and visitors.

Put this winter in context… how does it compare in terms of opportunities vs threats for the sector? 

I think the opportunities are as follows.

  • Short winter breaks for UK visitors who may not have gone abroad this year and want that safe, close-to-home, slightly better weather, weekend away.    
  • Staycations over the Christmas period for those who have not ventured off the island this year. 
  • Christmas parties, whether that’s for corporate, family and friends that we missed in 2020 - businesses and people will want to celebrate, it’s been two years since we all danced to Slade’s, ‘Merry Christmas Everybody’!

In terms of threats, I think there are these. 

  • Lockdowns in hospitality: we are the first to be targeted due to rising cases of covid, or another virus, that comes to light, or a flu epidemic that scares the Government, and we get a new ‘stay at home’ instruction! 
  • Restrictions on travel due to further covid outbreaks in other countries which limits our winter break opportunities.
  • Staff shortages and businesses not being able to fully open and maximise sales at the peak Christmas trading period, which sees them through the quiet months January to March.

In the medium-term, falling bed numbers is also worrying the industry - is that a problem which will threaten the sector’s viability? How do you see this one playing out?

It is always a shame to lose any hotels, but this has been happening for many years and the industry has not suffered with too few beds, so you could say that we had too many.  I do think we are getting to a position of stability with the bed stock now, and what we are seeing is investment in the hotels that are left, and that means they are here to stay.

Cafe

Pictured: Recruitment is one of the major issues facing hospitality. 

We also have some new bed stock with the two Premier Inn’s, and with their huge database their presence can only be a bonus for the island - and it also shows they see a future in the island’s tourism. 

The JCRA is reviewing alcohol pricing - what will you be saying to them?

It will be interesting to see how they go about reviewing pricing, and who they contact, as I’m sure businesses will be happy to talk to them.

drinks alcohol gathering cheers club bar toast party

Pictured: The regulator is reviewing alcohol pricing in Jersey. 

The media, and a few in Government constantly compare the price of a pint of beer to the UK, but you cannot compare like-for-like, as there are too many variables, from:

  • Buying power, the likes of Wetherspoons have over 1,000 pubs compared to The Liberation Group who have 48 in Jersey and Randalls have a similar number.  

  • Shipping costs to Jersey, which UK outlets do not incur.

  • Local labour costs are higher than the UK.

  • Rents and property prices in Jersey, are as we know, hugely higher than the UK.

  • Alcohol duty continues to rise above inflation, although for next year it is proposed that there will be no increase on beer and cider, but spirits and wine will go up by 5%.

All these higher costs will have an impact and they all have to be included in the price at the till! 

You have the ability to repeal one law tomorrow - which one would you choose and why? 

It would have to be the immigration Work Permits Law - it was causing issues prior to Brexit and covid, so it is certainly not fit for purpose now. It is far too restrictive as businesses are unable to attract a skilled labour force.

The length of the permit needs to be increased from nine months to at least two years, so we can fill the vacancies with longer term contracts. The cost of a permit also needs to be reduced, even if it is just for the next few years until businesses have a chance to recover from the last 18 months.  

A while ago, Jersey was told it needed to ‘love’ tourism again. In some ways that happened during the pandemic, when islanders couldn’t travel. Is the marriage now back on, or was it a temporary rapprochement?

Jersey never lost its love for Tourism, it just hasn’t had the recognition it deserves, and how it contributes to the island community and economy.  With people unable or unwilling to travel, locals visited parts of the island they had not been to for many years.

They realised what a wonderful place Jersey is, the natural beauty, the friendly faces, the safe environment, and most importantly when hospitality opened, what great places we have in Jersey to eat, drink, stay over and visit.   

There is no doubt the island’s tourism industry hit a ‘brick wall’ during the pandemic, but it will bounce back thanks to the help of Government, local support and most importantly the businesses themselves have the faith and confidence to provide a quality product for visitors to enjoy for many years to come.

This article first appeared in the November edition of Connect magazine, which you can read HERE.

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Posted by Louise Bree on
Bringing in more people is just not the answer. This will only add to property price hikes, inflation rises which will inevitably mean no one will want to come. Can't they see it is a viscous circle! The "Growing the working population to pay for the ageing population" policy has totally destroyed our island!
Posted by lloyd evans on
AGENDA 2030 do some homework people.
Posted by Dave Mathews on
This was always predicted to happen as property prices rose.
The Island has now outpriced itself out of the labour market.
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