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Tourism recovery on hold as staff shortages remain a “key challenge”

The tourism sector’s coronavirus recovery has been put on hold due to staff shortages, a major study has revealed.

The research, published by Lloyds Bank, suggests that “restricted capacity” remains a key challenge for the industry.

According to the Lloyds Bank UK Recovery Tracker, the number of UK sectors reporting output growth in July was “not unanimous” for the first time since March.

It comes as key services sectors, including tourism, healthcare, food and drink, and transportation, report labour shortages and weaker demand.

The report reveals that the growth rate of the tourism and recreation sector fell from 63.1 in June – the highest level since January 2012 – to just 55.3 in July.

This was attributed to a “levelling-off in forward bookings for UK holidays” and “cited restricted capacity caused by staff shortages”.

The analysis also suggests major inflation-related challenges in the hospitality sector, as higher wages and raw material costs contributed to “unprecedented” input price inflation, resulting in the “highest output price rises on record”.

But recent adjustments to the self-isolation rules are expected to “alleviate” staff shortages. The latest guidance means fewer workers are required to self-isolate after they have been in close contact with someone who has been diagnosed with coronavirus.

Commenting on the findings, Jeavon Lolay, Head of Economics and Market Insight at Lloyds Bank Commercial Banking, said: “As the economy edges back towards pre-pandemic GDP levels, there will understandably be less capacity for such rapid and out-sized gains.

“The latest report for July supports this, with both fewer sectors posting faster month-on-month growth in output and a marked drop in optimism around future growth prospects.”

Scott Barton, Managing Director, Corporate and Institutional Coverage at Lloyds Bank Commercial Banking, added: “While the UK recovery remains on solid ground, staff shortages and higher materials costs are clearly disrupting current business activity and future prospects, most notably in the hospitality sector.”

Click here to access the Lloyds Bank UK Recovery Tracker.

For help and advice with related matters, please get in touch with our tourism finance and accounting team today.


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