Despite the threat of war in the Middle East, the latest survey of members of the British Hospitality Association shows that the hospitality industry is continuing to invest heavily in new hotels, extensions and refurbishment programmes. Those currently underway or planned amount to well over £100m.
"Taking the industry as a whole, the figure this year is likely to be nearer £1bn", says Bob Cotton, chief executive, in the current issue of the BHA`s magazine, Hospitality Matters.
"The industry cannot be accused of neglecting its stock . . . although there are still hotels in major towns and cities that need to be renovated to bring them in line with customer expectations."
On the world situation, he says that war with Iraq "would be profoundly unwelcome on every count" and would severely damage world tourism - particularly the all-important North American market for Britain. "But one consequence may be that it would encourage employers to look more closely at the general organisation of their business and to examine ways in which it can be made more efficient."
The only answer to rising wage costs and staff and skill shortages was greater productivity, particularly as wage pressures would be made worse this year by the increase in employers` NI contributions which would add about £100m to the tourism industry`s wage bill. Soon-to-be-announced increases in the National Minimum Wage would also add to wage costs.
The survey shows that rising wage costs continue to cause concern. "Few employers would cavil at higher wages for staff but the NI increase will not benefit staff at all - it is a straight rise in taxation. As the industry is a heavy employer of labour, it will hit hospitality employers harder than most. And as the industry is crucial to many outlying parts of the country, where the NMW is near the going rate, it will hit employers in those areas hardest."
The survey shows that confidence in the industry, except for London, is lower now than it was at the end of last summer. This decline is put down to the threat of war but the survey points out that, ironically, it will be London that will be hit the hardest if war materialises.
Just over half of those surveyed reported better occupancy in the last four months of 2002 compared with 2001, with three quarters of hoteliers in London claiming an improvement; nevertheless, businesses in the south-east generally fared worse with 55 per cent reporting a decline. Rural hotels did well, partly due to stronger demand for short breaks, but only a quarter of hotels experienced higher occupancy in the business market.
"The survey paints a picture of an industry slowly recovering from the setbacks of 2001 but which is facing the future with only guarded optimism," says Mr Cotton.