Local accountant PKF Francis Clark has presented the findings of its latest Annual Tourism Barometer.
Hotels, leisure and tourism is at the heart of Cornwall’s economy, in many areas accounting for as much as 25% of the jobs and a significant proportion of the regions GDP.
It is evident that the sector is growing, with PKF Francis Clark’s annual tourism business figures showing that 2018 ended on a high with overall occupancy trading at 57%, despite the ‘beast from the east’s’ efforts to put off tourists at the beginning of the year. This is in contrast to the early part of this decade where the figures hovered around 50%.
The annual tourism business figures have been produced over the last 11 years by PKF Francis Clark’s Truro office and consists of a database of hotel occupancies, and room nights, which is then aggregated with market information on profitability and tariffs. It acts as a valuable barometer giving insight and feedback to the firm’s clients and the south west tourism sector as a whole.
It will be no surprise to hear that the start of 2018 was poor in terms of bookings and general performance. The cold weather meant that people couldn’t and didn’t want to travel to the West Country. The statistics on bookings bore this out with falls of 7% in March and 13% in April respectively.
Occupancies at 57% based on overall bed night occupancies is far higher than it was ten years ago
Generally, there is a seesawing around this time of year depending on where Easter falls, but the weather meant that in 2018 there was a real double whammy, with what is traditionally the start of the tourist season at Easter. The reopening of many businesses, particularly tourist attractions coincided with some of the coldest weather we have had for years. The fact that many people still came, but just delayed their trips to the south west was reflected in the numbers in May and June which were very strong.
However, by this point the occupancy statistics were running well behind. Modest improvements over the hot summer, as well as a strong finish to 2018 meant that the year actually finished on a par with 2017, which was in itself a record trading year.
Occupancies at 57% based on overall bed night occupancies is far higher than it was ten years ago. Historically this parameter has bumped along at around 50%, however there is now a spread between the ’best and the rest’ which is possibly greater than it ever has been. This not only means that there is a range of how busy hotels are, but also how they can function. With the access to labour becoming more difficult for various reasons, the hotels that have spare funds available to invest in the best staff can do so and many now run with wage costs in excess of 40% of turnover, which was previously the death knell of many hotels.
Head of tourism at PKF Francis Clark, Tom Roach, said: “This is a self-perpetuating issue as those hotels with the best staff give the best service which drives turnover, and so it continues. Of course, this isn’t just a simple, pay more, perform better formula, but a complex mix of investment in product, staff and marketing tools, and of course some hard work on the part of some visionary independent hoteliers in the West Country, who are fighting and often winning against the homogenised formula offered in other parts of the country.
“2019 is too early to judge at the moment, but based on some deposit levels that we are witnessing and some comments from local hoteliers, there as some slight headwinds currently. Certainly we aren’t seeing any double digit come back from the effects of the Beast from the east last year. Hopefully, this means that those that came slightly later in the year last year will come again this year, again slightly later.
“Undoubtedly one of the biggest issues currently is the supply of labour and some uncertainty in the general market. No one that I have spoken to recently expects major falls in occupancy to those which were experienced ten years ago, but frankly with the current level of wage costs this is just as well.
“General expectations are that occupancies will remain buoyant but wage costs and later in the supply chain cost increases generally are expected to impact on profit levels for 2019.”