In business

So what about 2023?

At the end of last year, I talked to a group of our Trustees and Ambassadors about the key challenges the tourism and hospitality sector faced last year and the prospects for this year. Our group included:

  • David Battersby - TFA Ambassador, who helped start the Gold Service Scholarship

  • Bernard Donoghue - TFA Ambassador, who is the CEO of ALVA

  • Stephen Dunn – TFA Trustee, who has worked extensively in the area of disability employment

  • David Edwards – TFA Trustee, who runs his own analytics consultancy, Scattered Clouds

  • Jenny McGee – TFA Trustee, who runs her own consultancy

  • Jeanette Ramsden - TFA Ambassador, who is founder and CEO of The Curve Group

  • Robin Sheppard – TFA Ambassador, who is the Chairman of Bespoke Hotels Limited

In this article, the group share their take on the key challenges that the sector will face in the coming year – and what positive and hopeful signs they see.

It looks like more of the same this year…

If we look at the Top 4 challenges the group identified last time, we can see that many of the difficulties the sector faced last year are going to continue through this year. The relative importance and impact of these challenges are likely to vary as circumstances develop, but the key underlying themes will remain.


On the face of it, the news on COVID should be better this year, as travel restrictions from China are lifted, which should see the recovery of inbound tourism from the Asian market begin in earnest.

It should be remembered, however, that the lifting of travel restrictions from China is the result of the failure – and abandonment - of the Chinese government’s “zero COVID” policy, with infection rates in China higher than ever. While the testing protocols which destinations are putting into place for visitors arriving from China should help to ensure that we don’t see an unmanageable rise in infection rates here in the UK, there is the possibility that new COVID variants may already be in circulation in China, which could be imported to Europe and the UK.


Our group all agree that the recruitment and retention of high calibre staff will continue to cause difficulties for the sector this year. Addressing these difficulties, and their impact, will require businesses in the sector to understand, and rise to, two key challenges:

  • The Productivity Challenge – businesses need to embrace the concept of working smarter, not harder. This will involve rethinking the ways in which work is organised and training a more flexible and multi-skilled workforce – and this will enable, among other things, rates of pay which are more in line with inflationary pressures;

  • The Social Challenge – businesses need to focus increasingly on employee wellbeing, including work / life balance, as an aid to attracting and keeping a more stable and better motivated workforce. This is particularly relevant in enticing back to work those older workers who have become economically inactive.

Cost pressures

The headline rate of inflation may already have peaked, but this does not mean the cost of living crisis is receding. In fact, our group all agree that its impact – both on individuals and families and on business operators – is likely to increase this year.

Many householders will come to the end of their fixed rate mortgage periods during this year – and find themselves having to pay hundreds of pounds more each month. Both businesses and individuals will see steadily rising interest rates making borrowing unaffordable.

The key factor, though, is likely to be energy costs. Many individuals and families who have coped thus far will be hit hard by the further rise in energy bills from April, when government support becomes targeted (rather than universal) – and reduces. And although the extension of the government’s energy support scheme is welcome, the current price cap will be replaced by discounts from April – and the level of support will reduce. For tourism and hospitality businesses, though, reducing the energy used in heating and cooking may not be an option – hotel rooms need to be heated for guests and restaurants and bars need to cook every day for customers. This will be a major challenge for the sector – and it is not out of the question that we may see reduced opening hours and even closures across all parts of the sector.


Internationally, the war in Ukraine continues to dominate the headlines. There is currently an uneasy stalemate, with both Ukrainian and Russian forces effectively dug in for the winter. The pressure on food supply (and prices) has actually eased slightly in recent months, with Russia’s agreement to allow passage to ships carrying grain from Ukraine, and we have even seen wholesale energy prices fall a little in recent weeks. It remains to be seen, however, how the situation will develop during the year as the winter deadlock eases - much will depend on the degree to which the international community remains committed to support Ukraine - and it is still not at all clear how the war will end or how long this might take.

Domestically, the chaos of the last year seems to have given way to a degree of political calmness and relative stability, as battle lines begin to be drawn for the next election, but the industrial unrest which has affected all areas of industry and the economy shows no sign of abating. Indeed, the situation appears to be getting worse, with further industrial action and strikes, on a greater scale than previously, currently being planned for the early part of the year - and co-ordinated to maximise their impact. The government’s engagement in talks may ultimately help to achieve a solution, but for the moment the deterrent effect on leisure travel looks set to continue.

Beyond this, tourism and hospitality businesses will also find themselves having to rise to the Environmental Challenge, seeking to reduce their impact on the environment and proactively addressing the concerns of climate and environmental activists.

…but there are positive signs!

Despite all the challenges that the sector is facing, our group can see a number of positive and hopeful signs.

The weakness of the pound means that, relatively, the UK is a less expensive destination, for both overseas and domestic visitors. This is reflected in the positive outlook for inbound visits (and spend) from the USA and it is also likely to bolster visits from Australia and New Zealand, where there is pent up demand. We are also seeing a recovery in the Middle Eastern market. Equally, although the domestic market will continue to be affected by restriction-free overseas travel, the impact of this is likely to be mitigated to a degree by the relative cheapness of the UK – and the relative costliness of overseas destinations.

Over the last few years, we have increasingly seen that people recognise the value of the tourism and hospitality sector. We have seen leisure travel shift from being purely a discretionary area of spending to being an intrinsic and treasured part of people’s lives and lifestyles. Although people may adjust their behaviour (and spending), most will prioritise and try to protect their holiday experiences. Businesses that target great customer service, while getting the basics right, will still attract customers for whom price is not the only issues.

Diversity and inclusion remain high on the social agenda and offer genuine opportunities for tourism and hospitality businesses. Those businesses who successfully address accessibility and inclusion will be able to attract a significant market, which faces equally significant barriers to enjoying travel, accommodation and hospitality. Offering reassurance that these barriers have been understood and eliminated (or reduced) will attract both new customers and the loyalty of existing customers, irrespective of other market conditions.

We are seeing many employers working to find creative solutions to the Productivity and Social Challenges they face. Businesses are engaging closely with their staff to develop initiatives such as reducing the length of the working day or closing at times, to give staff longer or more flexible rest periods or holiday breaks. Equally, the continuing difficulties in recruiting and retaining high calibre staff mean that there are greater opportunities for all to find fulfilling and rewarding employment. Businesses are beginning to understand the potential benefits of employing staff who have impairments (and can bring vital skills of versatility, adaptability and problem solving) or who are older (and can bring experience, transferable skills and flexibility).

We are also seeing businesses working to address the Environmental Challenge, targeting the reduction of food miles, adopting lean working practices and forging more effective supply chain partnerships.

Perhaps the most positive sign of all, though, is the creativity and adaptability of the tourism and hospitality sector. Businesses in the sector have proven themselves consistently to be innovative and creative in responding and adapting to changing circumstances. Our group all agree that this will continue to be the case – and that the sector will emerge stronger from the challenges that it is facing this year.