AN INDUSTRY VIEW
INDUSTRY COMMENT
HOSPITALITY & LEISURE THE FINANCIAL & OPERATIONAL PERSPECTIVE The compounding effects of Covid-19, business operational rethinks and the changing demands of guests, customers and members have presented many issues for leisure-based businesses. Now, there’s a possibility of this leading to opportunities for operators. There is no question that, in many parts of the hospitality and leisure sector, permanent changes have been made, be that cost re-engineering, new staffing propositions, or enhanced awareness of and demand for all aspects of Environmental, Social & Governance (ESG) to be brought to the fore. If asked, many businesses will tell you they’ve had to fight for their lives, and the health and fitness sector was certainly one of the most affected sub-sectors, experiencing limited widescale options for continued trading. The value of the sector became clear to government, however, and some support did come through: a range of solutions to help counter the lack of trade, and the balance to keep the business available to bounce back. We also saw a range of innovative solutions created by operators and banks and launched across the sectors. It was nothing short of incredible. One positive that came out of Covid-19 was that people realised the value of hospitality and leisure. It went up on the scale of personal priorities and appears to remain there. One key change has been the evolution towards working from home, driving local and city-based flexible memberships and inspiring a wider focus on health and fitness. From an operational perspective, businesses are looking at streamlining CRM and data-led solutions to run businesses more efficiently, seamlessly linking with secure payment terms and typically incorporating supplier-friendly options. Meanwhile, the ability to service debt remains crucial – and available cashflow is key, as opposed to lending against a balance sheet value. The sustainable cashflow model proved itself to be the most resilient restructuring tool, and while flexibility and time is slowly enabling a return to ‘business as usual’ trading, it remains a key component between banks and borrowers. Then there’s ESG: a huge and increasingly prominent topic. Any operator that ignores this, at any level, arguably does so at their peril. Whether a PLC or an SME, ‘sustainability strategy’ – be it commentary in audited accounts or references in marketing material – is being monitored more thoroughly and more regularly than ever before. And your clients, customers and guests increasingly expect it. Get it right and it can, and does, lead to greater loyalty as they buy in to the plans you’ve set out. Finally, the wider hospitality and leisure sector appears well-set to break through pre-Covid growth levels – many businesses already have – with investment coming through to help capture this refreshed opportunity. There are and will be casualties, but an open approach to funding and operational options, based on a partnership-led relationship, can only be a positive one.
One positive that came out of Covid-19: people realised the value of leisure. It went up on the scale of personal priorities and appears to remain there.
MIKE SAUL Head of Barclays Corporate Banking
Hospitality & Leisure Sector
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STATE OF THE UK FITNESS INDUSTRY REPORT 2023
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