Despite both businesses and consumers dealing with pressure on their finances, a survey has indicated that confidence in East Anglia's tourism and leisure sector remains strong. Bethany Whymark reports.

Investment is increasing among East Anglia's powerhouse tourism sector as businesses vie to keep cash-strapped holidaymakers interested despite creeping pressure on profits, a major industry survey has revealed.

The majority of businesses who answered this year's Larking Gowen tourism and leisure business survey recorded an increase in turnover last year (62% compared with 68% in 2016) – but the number who saw a decrease rose by almost half to 19%.

Around 44% saw their profit rise in 2017, down from 56% the previous year – but 51% are anticipating an increase in profit in 2018.

Chris Scargill, tourism partner at Larking Gowen, believes challenges in the market will continue in 2018 as household budgets continue to be stretched by price inflation and slow wage growth.

But he said businesses were still optimistic, and that new 'organisational practices' could start helping them to plug the gaps.

'Norfolk, Suffolk and Essex are not full yet,' he said. 'I think people, especially in London, are discovering us, but there are still fears. We need to keep listening to businesses and not assuming that tourism just happens.'

He added: 'We are in a changing climate and I don't think the number of businesses expecting increased profits is as high as it has been in previous years.

'Profits provide security and enable businesses to invest in developing. It is critical for the long term that profits remain strong.'

The survey found fewer businesses are seeing an increase in tourists' secondary spend – such as buying a drink in a hotel bar or purchasing something from a museum gift shop – which Mr Scargill said was 'indicative of problems'.

'Keeping people's luxury spend up in the tourism and leisure sector is going to be important because I think it is going to be harder for them to get a share of that limited resource,' he said.

Some survey questions revealed the extent of pressure on consumers. More people left it later to book their holidays in 2017, with 69% of businesses reporting an increase in late bookings, while 55% saw an increase in the number of shorter stays being booked. The number seeing an increase in secondary spend dropped by almost a quarter, from 38% in 2016 to 29% last year.

The number of holidaymakers sticking to a budget has rocketed over the past three years – in 2015, 22% of businesses reported an increase in visitors watching their pennies, but in 2017 it was 36%.

While the survey showed faltering optimism in the national picture and struggles among holidaymakers, respondents' confidence in the prospects of their own businesses rose, with one in five (19%) feeling more optimistic than they did in 2017.

Effective cost cutting, more advertising and increasing their offering could be behind this, as well as adapting to the constant change of recent years, Mr Scargill said.

This confidence – not just in themselves but in the region as a whole – is being reflected in an increased spend on marketing to help companies make themselves more 'visible'.

A third (32%) of surveyed businesses are now spending at least 5% of their turnover on advertising, with 39% looking to increase their spend on PR and marketing in the next year – the most popular investment after site improvements.

For the first time, questions on staff wellbeing were included in the survey. Wellbeing schemes were in place at 54% of businesses while 8% planned to introduce measures in 2018, with common initiatives including flexible working hours, seasonal bonuses, staff discounts and incentives, free drinks and snacks, and social activities.

But Mr Scargill said questions posed to business owners about their own wellbeing have revealed more worrying results, with 52% working longer hours than they were five years ago and 58% feeling under more pressure.

'This is a trend in the sector – it is perhaps no longer the bolt-hole for semi-retirement that it used to be,' he said.

The vast majority of businesses (83%) still do not feel there is enough government support for the sector. When asked what could be done to better promote it, 34% felt more targeted government grants would help while 41% wanted more support from local authorities.

More than 300 tourism and leisure businesses responded to the Larking Gowen survey, which is supported by Visit East Anglia, Visit Norfolk, Visit Suffolk and Visit Essex.

The Ed Sheeran factor

An historic Suffolk castle became an unexpected tourist hot spot in 2017 – thanks to local superstar Ed Sheeran.

The singer-songwriter's single Castle on the Hill – released in January last year – was inspired by the castle in Framlingham, were he grew up, with the music video filmed around his home county.

And the attraction is feeling the benefits of fame – with visitor numbers for the 2017/18 season topping 100,000, a increase of 30% on the previous year.

Kirsty Horne, property manager at Framlingham Castle, said the release of the single had changed the demographic of visitors.

'As well as our usual families and grandparents with grandchildren, we started to get lots of people in their late teens to mid-20s,' she said.

As well as its starring role in Sheeran's song the English Heritage property has recently benefited from a new cafe, part of a £1.2m conservation and improvement project.

A spring bookings bonanza at lettings agency

Bookings are blossoming at holiday lettings companies straddling the Norfolk/Suffolk border.

Norfolk Country Cottages says that after March's bitter weather, holidaymaker demand is hotting up with April off to a record start.

Bookings are up 11% year-on-year and Easter bookings increased by 13.7%, the firm said, while sister company Suffolk Secrets also reported a rise.

The company, which has offices in Holt and Reepham, has also noticed a change in how holidays are booked.

Norfolk Country Cottages brand manager Lucy Downing said: 'The gap between people booking and taking their holidays has shrunk considerably this year, with holidaymakers being more spontaneous over holiday bookings, particularly short breaks. It's the first time we've seen such a marked trend in those taking last-minute breaks.'

Norfolk Country Cottages and its sister company, Holkham-based Salt Norfolk, are expecting the upward trend in bookings to continue – May half term bookings are already on a par with 2017 with six weeks to go.

The price of staff pay

While many business costs are going up, perhaps the most significant rising outlay for the tourism industry is wages.

Last year saw increases in the national minimum and national living wages, which more people said had had a negative impact on their business (46% compared to 40% in the 2017 survey).

Of the 73% of businesses surveyed who employ staff, 40% took on more part-time staff and 35% took on more full-time staff in 2017, while around 6% cut part-time jobs and 3% cut full-time roles.

With the minimum and living wages rising again this month, a third of businesses indicated they would not take any action for staff paid above these thresholds – but 6% said they may implement a pay freeze and 14% were planning below-inflation pay increases.

Larking Gowen tourism partner Chris Scargill said: 'Nobody I speak to has a desire to undervalue the significant contribution of their staff, but they see the rises taking place too quickly to allow for price increases their customers will accept.'