The new UK government has raised the prospect of changes to how workers are paid.
Minimum wage legislation has a major impact on the leisure and tourism sector so, as we approach the new UK government’s 100th day in power amid promises of a ‘painful’ Autumn Budget, there are very real concerns.
One particularly pressing question is: What does the government’s ‘vehement commitment to the Genuine Living Wage’ mean for the nation’s holiday parks?
After the damaging effects of successive lockdowns, followed by the cost of living crisis, holiday parks have had a turbulent few years. Now, with a ‘Genuine Living Wage’ (GLW) on the cards, park owners may want to consider how to adapt to the changes.
While we don’t yet know the specific wage increases proposed, any increase is likely to drive up basic operational costs for UK holiday parks, even though the GLW is expected to be voluntary.
Holiday parks often employ a significant number of low-wage workers, such as cleaners, kitchen staff and maintenance workers. This is especially true when you consider the scale of seasonal employees that holiday parks employ to cater to a growing number of guests.
Implementing the GLW would put pressure on employers to offer higher wages for these workers, leading to increased labour costs for holiday park operators to manage. While this could be accommodated by dissecting operational costs or perhaps increasing prices for customers, with bookings increasing as more Brits look to enjoy UK ‘staycations’, this could be offset by an increase in visitor numbers - as one regional operator is discovering.
Skegness and Mablethorpe houses approximately 37,000 caravans in the district, which is the highest concentration in Europe. Haven has 41 sites across the UK and has recently announced a huge recruitment drive to add a further 950 employees to its Cleethorpes, Mablethorpe and Skegness sites as bookings surge.
While owners would hope that an increase in visitor numbers will help cushion the expense of higher wages for employees, it may be necessary for some holiday parks to conduct a careful audit of their prices - with the possible result being cost adjustments that they then pass onto customers.
However, it’s important to consider that this would make holidays more expensive for consumers, potentially reducing demand, especially among budget-conscious travellers.
These cost-conscious travellers are a critical audience for the sector, with almost half of Brits (48%) admitting that affordability was a key determining factor when choosing their next holiday destination - so holiday park operators are advised to exercise caution when passing on cost increases to avoid pricing themselves out of the market.
Of course, there is the option of pivoting to operate in a different market segment. For example, some parks might choose to position themselves as premium destinations, justifying higher prices with improved services and facilities funded by higher wages.
Unfortunately, not all holiday destinations will be in a position to make widespread changes to reflect higher wages. Smaller, independent holiday parks might struggle to absorb the increased labour costs, which could lead to reduced profitability.
This could even result in closure if they aren’t able to compete with larger operators who can spread the cost increases over a larger revenue base, which could ultimately lead to consolidation throughout the industry.
Essentially, this could mean that the sheer pressure on profit margins leads to larger companies buying out smaller, struggling parks, potentially leading to less competition and a less diverse market for customers to enjoy.
The government’s GLW may have a stark impact on seasonal employment, which is currently standard practice throughout the industry to account for the peaks and troughs of on and off-seasons.
For parks heavily reliant on seasonal workers, offering a GLW could make them more attractive as employers, helping them secure better-quality, more loyal staff during peak seasons.
Of course, this would be a clear shift in most holiday parks’ employment models. We may well see some holiday parks opting to maintain a smaller, core year-round workforce to manage costs more predictably, instead of hiring large numbers of seasonal workers.
Of course, it’s important to remember that, so far, the GLW will be a voluntary initiative that employers need to opt into - so it will be interesting to see how the government intends to incentivise the tourism sector to adopt this. The overall impact will depend on how individual holiday park operators choose to adapt to these changes.
While we await more concrete news about the national rollout of the government’s Genuine Living Wage, holiday parks that want to get ahead of the curve and embed strategic decision-making to combat rising costs are advised to get in touch with our expert team today.
