Zero-hours contracts benefiting hospitality sector, says survey

Around one third of staff working in guest houses, hotels, restaurants and pubs are now employed on zero hours contracts, according to a survey of the region’s leisure and tourism businesses.

Despite the flexibility this arrangement offers employers, well over 60% of these staff regularly work 20 hours or more – with more than three quarters of these routinely employed for 40 hours per week, according to the latest MHA Leisure & Tourism Survey.

The annual survey, compiled in conjunction with Lancashire-based accountancy and business advisory firm Moore and Smalley, one of nine MHA members, paints a picture of an industry starting to benefit from an upturn in trading conditions.

More than half (56%) of those surveyed reported improved profitability in the last 12 months and 58% predicted that 2014 will be better still. However, 50% cited turnover either stagnant or growing by less than 5% over the last 12 months.

Judith Dugdale, head of the leisure and tourism team at Moore and Smalley, said: “The travel and tourism sector is emerging from a sustained period of low growth, but with discretionary spending improving across the economy as a whole, the hope is that – weather permitting – the year ahead will see the return of profitability capable of supporting future investment plans.”

“One indicator of this growing confidence is the number of employees working extended hours on zero hours contracts. This sector was always going to be an adopter of this employment option, but the numbers working what might be considered a ‘standard’ working week suggest that this arrangement is working for both parties.”

Almost a quarter of the operators covered by the survey look set to increase investment this year in premises refurbishment, while 16% will be spending more on marketing – particularly social media – to support business development. Online bookings increased for 62% of respondents in the last 12 months, although 46% still say they see little or no benefit in engagement with Facebook and Twitter. Those that are active use social networks for loyalty schemes, responding to customer queries and brand building.

“For a sector so reliant upon personal service and positive communication, there is perhaps a surprising reluctance among a significant minority to embrace the social media era, particularly when the volume of bookings being made online is increasing year-on-year,” says Judith.

This sector is also focused on the green agenda, with 82% having environmental policies in place. That said, the vast majority said they had no plans to introduce energy efficiency measures such as solar arrays or biomass boilers – and 40% were not even aware of the tax breaks offered for such investments.

“It is certainly worth operators noting that with the increased Annual Investment Allowance now standing at £500,000 until December 2015, this could be a good time for companies to think seriously about capital expenditure,” said Judith. “Not only will this provide financial benefit – it will also enhance the brand appeal to consumers who are becoming increasingly conscious of environmental issues.”