bannerImage.png

Beyond the balance sheet

How to make Oxford tourism & the Westgate work for the hospitality trade

Stuart Crook 28/6/2018 9 minute read

Stuart Crook ACA on how independent hospitality businesses can come together to take advantage of the tourism opportunities Oxford generates.

Wellers' latest roundtable discussion for the hospitality trade took place at Rhodes House on a sunny mid May day. Bob Cotton OBE, former Chief Executive of the British Hospitality Association, chaired proceedings and was joined by guests including Hayley Beer-Gamage, of Experience Oxfordshire and Ian Gray, of Oxford City Council.

The focus for the lunch was on whether Oxford's tourism influx and the Westgate shopping centre are working for the wider city and county. The Westgate is the result of a £440m investment and has attracted 9m visitors since its relaunch in October 2017. Its market is two tier in nature, consisting of consumers who live and work in Oxfordshire as well as tourists visiting the UK. The question being, how to make it work as a draw for the wider independent businesses?

Subscribe to our monthly newsletter for business and financial insight

Often people will site national government for specific matters when the reality is it's local government that has the most impact on enterprise. These are just a few examples of matters that come under local control:

  • Business rates
  • Collecting the rubbish
  • Traffic, transport and town planning 
  • Parking and access to local businesses

What this demonstrates is that local government and specifically the Council are vital to operators to put their views forward. The question then is which part of the Council is responsible for these matters? In Oxfordshire there is the City and County Council

Using this generic term, the Councils are the local arms of national government and the trade needs to be represented through a body, in this case Experience Oxfordshire, to promote their interests and act as the marketing arm for:

  • Why people should visit Oxford?
  • Why they should stay in the city?
  • Why they will enjoy visiting?

The importance of tourism and the hospitality trade to Oxfordshire

Statistics reveal that in 2016/17 there were 7 million trips made to Oxford at a value of £830m to the economy. Furthermore 14,000 jobs in Oxfordshire are connected to tourism. The trade can be seen as a key part to providing jobs for young people and the disadvantaged. The trouble for Oxford is traffic issues and parking arrangements appear on the surface to discourage people from visiting. 

The economic impact of tourism in Oxfordshire - accommodations, trips, expenditure and employmentCompare that to York which is very tourism friendly and an easy city to access. In Brighton at the new marina development, parking is free to attract visitors to use those facilities. Signage is essential as well, sure you can get into Oxford easily enough with the park and ride but getting back out can sometimes be confusing for the visitor groups. 

The takeaway is for trade organisations and local Councils to work together to improve things for all parties. A case of the trade delivering for the Councils in terms of their agenda and vice versa.

County and city/district council responsibilities

The impact of current economic conditions on the trade

In many cases the experience at an independent hospitality businesses is unique and thus a great selling point. Unfortunately business rates and high rents means restaurant closures are reportedly on the rise. 

Then factor in the impact of the Westgate which opens up local operators to more, new competitors. Suddenly you're faced with 20 or so extra food and beverage outlets. One of which in the Westgate has reportedly already ceased.

That said competition does force proprietors to be better, to think and fight harder to improve the customer experience. It places the emphases firmly on restaurant management skills. One guest explained how they have become far more pro-active in visiting the Westgate stores and other competitors to gauge what they are now up against and how to best market their business.

The point is the general economy is the reason for any downturn experienced by independents and the Westgate can't be blamed for that. Many restaurant businesses are likely to be vulnerable because if labour is now coming in around 33% as a cost of turnover and rent at 10%, then factor in business rates and food inflation, so you can see why margins are very tight.

 

Any slight variation on the top line and the impact is potentially severe. Consider the high street in Oxford and it's fair to say there's probably over capacity in the food service area. Today every Starbucks, every Costa and every pub is a place where people can enjoy food. It means consumers have a vast array of choice and are no longer limited to just the traditional restaurants.

For that reason restaurants are very sensitive to changes in the marketplace because trading conditions are tough and competition fierce. If you operate near the Westgate and see a drop in turnover of 5% as a result of it, that's potentially extremely significant for the business.

Changing consumer trends

What people want around how they live and work is also changing. Witness Deliveroo, one operator explained how this ties in as part of their restaurant and is a booming part of their trade, even for meals such as fish and chips. The rise of the take away market represents a major changing trend for the sector to adapt to.

Operators need to think carefully before getting too inventive and committing to investment. They almost need to go back to what is their market and whether their particular customers want to spend the time coming into a restaurant or whether they'd prefer to order in to their home instead.

Many in the trade are surprised today by how much consumers are now willing to spend to have their meal packaged up in a little box and delivered to them, just for the convenience. The flip side of this is when people do actually go out to eat and drink, the experience has to be brilliant to ensure they remember it well and become repeat customers.

The colleges and tourism

Historically the colleges haven't been clear in demonstrating whether they did or didn't want tourists. Their central location and the pull they hold in terms of attracting tourists begs the question, what can be done with them to ensure such an opportunity isn't lost for local businesses?

Some interesting innovations and experiences are now beginning to appear from the colleges of Oxford and this can really be to the benefit of the whole area. There was talk in 2017 of over tourism however, numbers were actually down, it was just that the development of the Westgate meant they were concentrated in a smaller area.

The problem has been the colleges are not hospitality businesses as understandably they've seen their job as purely academic. Colleges are in the main only concerned with undergraduates and post graduates. This forms the core of their ecosystems. From a business perspective therefore colleges can perhaps be viewed as simply historical buildings that tourists will go to look at.

The discussions at Wellers' roundtable lunch for the hospitality trade at Rhodes House 

Oxford Limited on the other hand is the commercial arm which does look at various initiatives to generate revenue. Oxford alumni re-connect with former graduates and they look to bring them back in for various events to provide them with an experience. These are the University arms for operators to seek involvement in.

Departments in the University are another potential area to work with as they contain employees and will look to do group bookings and meals/occasions out. Go to a chemistry department for example and all those people who work there will likely live in the county and enjoy going out to eat and drink.

The threat of online retail to the Westgate development?

The shift between town centre retail and online has been huge with significant implications, as witnessed by the recent slew of difficult headlines for the likes of House of Fraser, Marks & Spencer, Mothercare, Toys R Us, Prezzo, Jamie's Italian and Byron Burger. However, when talking about consumers and visitors it's all about giving them a great experience.

In that sense it's very difficult to compete with the online market being all about convenience. To attract people to a place is very different, being experiential. For this reason the Westgate have held various events including:

  • Food classes for children
  • Arts and crafts classes
  • Story telling sessions
  • Gym showcases
  • Promoting the latest store openings, their offers and products

The county of Oxfordshire has also proven to be very good at delivering a range of events and experiences for people. This is witnessed in the what's on section of Experience Oxfordshire's website where there are over 3,000 listed.

Seasonality and the economic impact of tourism on OxfordshireOnline presence can however, be utilised to provide consumers and visitors with a good reason to come and enjoy a unique experience. The John Lewis store for example is the first of what they call their "experience stores" and the idea is you go there and see something you like, you then order it online using either your phone or the pads they have on site. 

On the surface this may seem unusual however, John Lewis have realised that they do most of their trade online and that is the most profitable arm of their business. They see the power of experiences for consumers and utilise that to help drive sales.

Working together to make the Westgate work for all

Operators have to appreciate that such a major investment in the city can only be a good thing, given the consumers and tourists it can potentially pull in. The question is how to club together to make it work better for more people and businesses than just those based in the shopping centre?

There is plenty of cause for future optimism. Sure costs have risen significantly for many in the trade through auto enrolment, rents and business rates. Customer habits do also keep changing. However, there are more people in work, there are more people living in this country and visitor numbers are healthy. That means there may be plenty of opportunities ahead. 

Pudding at Wellers roundtable lunch for the hospitality trade at Rhodes House

Hospitality and tourism will almost certainly be around in 20-30 years time and the trade has grown every year since 2008. There are many other industries that haven't achieved that same year on year expansion. The difficulties currently experienced are coming from a positive standpoint. The question is how to continue to grow and do better?

The solution is in working together and exchanging ideas among hoteliers, restaurants, visitor attractions, retailers and even theatres. Everyone who makes up the experiences of the city and county should come together through Experience Oxfordshire for example. In turn they should also work more closely with the Councils.

If as a sector there is a problem, rather than complaining about it, operators need to work with the Councils to find potential solutions and a better way of doing things. It's not in local government's interests to see businesses struggle. All sides need to engage better with each other especially as politics appears to be moving in a direction of more social cohesion.

In many parts of the country this has been witnessed in the rise of Business Improvement Districts. BIDs are geographical areas in which local businesses invest together to improve their environment.

BID members then enjoy additional or improved services including environmental measures and cleaning to name some. BIDs are funded by a mandatory levy on all eligible organisations and provide a body to mediate with local Councils, transport and other local bodies.

Ultimately businesses, whilst needing to make profit, have a hand in helping society to improve things for the next generation and protect the environment. Only by working in unison, through collective group action, can such aspirations become a reality.   

Subscribe to Wellers' monthly newsletter

The content of this post is up to date and relevant as at 28/06/2018.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

 

leave a comment -

Popular posts

How to understand the different types of shares & class of shares
What you need to know about tax & payments on account
How employers can claim from HMRC for UK statutory maternity pay?