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How Brexit will affect the Hospitality Industry

The United Kingdom deciding to leave the EU has had a massive effect on all of the industries in the UK. However, this decision had the biggest impact on the hospitality industry as there will be a lot of changes which will affect the way restaurants, bars and other hospitality business will run their businesses. Here a few of the changes that will affect your Hospitality business due to the UK leaving the EU.

How Brexit will affect the Hospitality Industry

Employment

Due to the UK leaving the EU, there will be changes in the laws regarding workers from the EU working in the UK. This means that it will be harder to attract skilled and qualified workers to your business as the workers will need extra work permits which will make it more complicated for the EU workers to get jobs here which will lead to them staying in their own country. If your company brought in workers from the EU, the permits would take a long time to be validated and will also cost a lot which will lead to your costs rising and the profit margin dropping. It will also lead to your restaurant or bar being understaffed if you are relying on the EU worker because it will take longer for them to be able to work for your company which will decrease the productivity of the business and may leave you unable to serve customers effectively. This will lead to the customers getting annoyed leading to them losing their loyalty which will damage the number of sales you make as you will receive less customers which will lead to the profit margin falling. This shows that the new laws regarding employment will have a huge effect on the Hospitality industry and could lead to small businesses failing. 13% of the working force of the Hospitality Industry is from EU countries, this shows that the new employment laws will have a massive effect on hospitality businesses which will lead to the costs of the whole industry increasing which will lead to the whole industry struggling.

Suppliers

Many Restaurants purchase from a supplier who are situated in the EU, this will lead to the Restaurants being affected negatively by Brexit. This is because the trading laws will change and will lead to the restaurants having to pay tax and tariffs on the products they buy from the EU which will lead to their costs increasing which will lead to the profit margin decreasing. This will lead to the Restaurants struggling to make money. This could lead to the Restaurants having to raise their prices which may lead to customers not being able to afford their prices which will also lead to their sales decreasing leading to the profit margin decreasing which will limit the amount of money the restaurant will be able to generate. The pound has also gone down in value which means that the restaurant will have to pay more for their products which will lead to the costs increasing. This will have a major effect on restaurants and bars as it will also lead to the prices of the products increasing which will lead to customers not wanting to pay them prices which will lead to the sales increasing which will lead to the profit margin decreasing even more. These changes will lead to the Hospitality industry struggling as they will not be able to make the same amount of revenue as they did when we were still in the EU.

Increased Number of Tourists

It is not all doom and gloom for Hospitality businesses. This is because there will be more tourists coming to the UK as the pound will be weaker which will lead to their holidays being cheaper. This means that there will be more demand for Hospitality businesses such as Hotels and Restaurants which will lead to them getting more customers which will lead to their sales increasing, this will also help repair their profit margin. This will mean that the negative effect of the EU will be minimised as the businesses will continue to get sales as the number of customers will increase which will also lead to the profit margin increasing. This shows that the decision of the EU Referendum can also help Hospitality businesses and may not be as bad as it sounds.

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