Tourism and leisure activities are some of the most important sectors in the rural economy. Our Director Jim Richards comments on the industry's challenges and opportunities, and what agricultural and rural businesses should do now to invest and prepare for a profitable future.
Tourism is vibrant and vital
VisitBritain reports the tourism sector will grow 3.8% per annum through to 2025. That’s faster than the overall UK economy with a predicted rate of 3% per annum. By 2025, the British tourism industry will be worth over £257 billion and provide 3.8 million jobs.
Admittedly, the industry faces challenges - not least of which the Brexit effect. A continued decline in confidence from European markets, which account for over 70% of inbound tourism, will have put pressure on some business. But balanced against this fall in confidence is the weaker pound, which makes now a good time to visit Britain. And more Brits are staying at home and holidaying in the UK - in what is termed the Staycation effect.
Sykes Holiday Cottages Staycation Index reports that the number of British people holidaying in the UK is growing 10% per year. With the weaker pound, Brexit uncertainty, greater awareness of the environment and warmer weather in the summer months, Sykes predict this trend will continue. With more Brits choosing to holiday at home, it’s good news for the tourism and leisure businesses in the right areas.
Rural and countryside tourism
In rural areas, tourism works hand in hand with farming. Britain’s scenic landscapes cared for by farmers, and the accommodation and countryside attractions provided by them and other landowners are an important asset in attracting both Staycation and overseas visitors to the area.
Accommodation and attractions for tourists can be an important element of diversification for many farm businesses. A vibrant local rural visitor economy has knock-on effects in the whole community too.
Talking to delegates at a recent Yorkshire rural tourism event, I heard that some businesses had seen customers delay visits during this perceived period of uncertainty. Although these visits may only be delayed and not lost, it will be interpreted in business accounts as a downturn in performance - and this could have far-reaching consequences in some circumstances, particularly with those looking for finance.
While some delegates were challenged to find ways to counter a lull in activity, other businesses were reporting tremendous results and year-on-year growth. So, the messages were mixed. But it was clear that the businesses continuing to perform well are the forward-thinkers, action takers and those not afraid to embrace change.
With farming policy moving towards encouraging increased access to the countryside, the opportunities for farms to diversify into leisure and tourism-related activities will increase further. Farm and rural businesses need to be ready to capitalise on this and put their destiny into their own hands.
Whether it’s converting redundant buildings to holiday accommodation, starting a glamping or camping site, offering rural experiences or leisure pursuits or developing food and drink businesses, there are several things businesses can be doing now to strengthen their future position.
- Start planning immediately. Don’t take the ‘wait and see’ approach. Reviewing potential risks in your business is important, but not to the extent that it paralyses any business activity or development.
- Make your own decisions based on your own research, careful calculations and observations. Don’t be beholden to negative news and uncertain economic forces.
- Work on your strategy, business plans and financial forecasts based on both conservative and more bullish assumptions.
- Be innovative and think outside the box to stand out from the competition.
- Put any building blocks in place now, such as investigating and arranging appropriate grants, finance and planning permissions, so you are ready to act quickly when the right opportunity arises.
- Speak to your bank, other lenders or advisors about borrowing. Interest rates are still currently low which makes borrowing cheap. Base rate remains at 0.75%. In their Monetary Policy report the Bank of England states that if economic growth remains weak, they may have to reduce rates further to support growth. Conversely, if it recovers then a modest increase in rates may be necessary.
It’s vital that those with rural leisure and tourism opportunities start preparing to invest now, especially while interest rates are low. Others should be investigating every avenue to uncover their potential opportunities. Act now to determine your future – and remember most successful investors don't invest at the peak but in the trough.