Hospitality operators fear 'Empty 2013' as business confidence plummets to lowest level for 20 years

The growing fear that difficult economic conditions could contribute to the impact of the looming, so-called 'Empty 2013' comes as a key measure of business confidence reports another steep drop in positivity.

20 years​

The BDO Optimism Index, which is a survey of British businesses carried out by accountants and business advisers BDO, fell to 89.1 last month from 93.1 in July - a score of 95 would indicate an expectation of a return to growth.

The index predicts business performance two quarters ahead and is now at the lowest level for 20 years after the sixth consecutive monthly drop in optimism about future economic performance.

Statistical fears appear to back-up warnings that a number of hospitality operators have made to the industry via BigHospitality that very tricky conditions combined with a lack of headline events could spell trouble for the sector.

'Empty 2013'​

At a recent event debating the impact of the London 2012 Olympics on the hotel industry and what good any 'legacy' might bring hoteliers, Ruth Mortimer, editor of Marketing Week, said there was a growing view among marketing and business leaders that next year would be very different to operate in without the big tourist and sporting events of 2012.

"The phrase 'Empty 2013' seems to be falling into common business parlance - it is the year with nothing to look forward to. Doing things like budgeting a decline is an incredibly prudent thing to do because it has been an artificial bubble based on events."

"However that doesn't mean I don't think there are lots of opportunities out there - people will have to work harder and companies, hotels and brands will have to find hidden stories that aren't as obviously attractive as the Olympics."

Tough​

Speaking to BigHospitality, Jonathan Kaye, chief executive of Prezzo restaurant group, said even restaurant operators who had not seen the boost in trade from the Jubilee or the Games should be prepared for a difficult next year.

"I think those big headline events were more of a hindrance than a help to be honest - the European football is always painful, I think the Olympics were probably quite neutral. I think the macro-economics as a whole are more my concern - for years now we have been saying next year is going to be tough and we are saying it again," he said.

Budget for decline​

Gareth Banner, general manager of boutique London hotel The Hempel, said while the 'warm glow' from the Olympics would stay in the short term, he and other hoteliers and hospitality operators should consider budgeting for a decline in 2013.

"If we are not careful I believe the spotlight on the Olympic Games will fade as is inevitable and there is going to potentially be some very uncomfortable conversations."

Banner argued an increase in hotel supply, the continued impact of comparatively high VAT rates, operators that go down the discounting route and a drop in demand because of the economy would mean only the 'smartest' hospitality businesses would survive in 2013.

"I would have very modest expectations for growth. We have had an exceptional year and the next big event as far as I am aware is 2015 and the Rugby World Cup and even that isn't on a par."

"The Royal Wedding and the Jubilee were in many ways a damp squib but I think it could be a tough couple of years trading. The spotlight will fade," he argued.

Are you concerned about 'Empty 2013' or are you excited about the opportunity of marketing your business in new ways and operating without the headline events such as the Jubilee and the Olympics? Let us know your thoughts by leaving a comment in our LinkedIn group discussion​.​