South West hospitality set to get a boost from rising visitor numbers

The South West is set to receive more overnight stays from domestic visitors in the first few months of 2025 than it did during the same period in 2024, new data from VisitBritain shows.

While the first quarter of the year is a traditionally quiet for hospitality and leisure firms, this suggests the period won’t be substantially weaker than last year. This could support the sector’s resilience following a disappointing summer, where visitor numbers are estimated to have been 15% lower than in 2023 and spend was reported to have declined.

VisitBritain’s data shows that the South West is expected to be the third most visited part of the UK in terms of domestic visitors making overnight stays in November and December, after London and the North West.

It is forecast to retain this position in Q1 of 2025, with its share of visitors increasing by one point, year on year.

However, the data suggests that – a national level – domestic overnight tourism in the first few months of next year will be focused on urban areas, with planned visits to the countryside, villages and coastal towns all seeing marginal declines.

Matt Whitchurch, financial advisory partner at FRP in Bristol, said: “The South West has an enviable reputation for hospitality and leisure, earned due to the quality of its offering and the natural beauty of its landscape. While this data only looks at a part of visitor trends, it will be welcome after what has been challenging year.

“The first few months of the year are usually a quieter period, and businesses often rely on earnings from the busier summer and pre-Christmas to tide them over. While domestic overnight visitor numbers aren’t forecast to be worse than last year, many firms will still be going into this period in more challenging position than they have before, given they’ve had a slower summer and they face increased costs from April in the form of both hikes to the minimum wage and National Insurance, with some also set to be hit by a reduction in business rates relief.

“For management teams across the sector, the focus needs to be on resilience. And they shouldn’t assume that what’s worked for them previously in terms of a ‘first quarter strategy’ is going to be right this time around.

Jonathan Dunn, restructuring advisory partner at FRP in Bristol, added: “The most important thing for hospitality and leisure firms looking ahead to the coming months is to be proactive. They must be vigilant for any red flags, and tackle problems directly – big or small.
“It’s obvious, but essential, that they have an objective, accurate, up-to-date view, and a realistic assessment of their financial health. A rolling 13-week cashflow forecast should be a central part of this.

“And they should be proactive in considering any changes they need to make to their trading strategies now.

“This will give them time to put any solutions in place before any issues become entrenched in the new year. This might mean negotiating with their suppliers to extend payment terms to assist cashflow, or – in extreme cases – taking the decision to temporarily mothball some, or all, of a business until demand picks back up.

“It also allows runway to explore and negotiate a revised funding structure, whether that’s short-term lender support, and/or equity injections, which can provide valuable financial support but are hard to arrange at short notice.”

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