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Hospitality venues to increase prices by 11%
Almost half of hospitality operators are reporting that there will be an ‘inevitable’ price hike for consumers in 2022, as a result of financial losses faced during the Christmas period.
Trade body UK Hospitality carried out a survey of more than 340 hospitality businesses, which represent 8,200 venues.
Forty-seven percent of operators surveyed revealed that they will have to increase their prices by more than 10% in 2022, with 15% of venues expecting price jumps of more than 20%. Across the sector, the average price hike is expected to reach 11%.
UK Hospitality chief executive Kate Nicholls said: “Omicron has infected the start of 2022 with lower-than-expected trading levels and higher-than-expected cancellations in hospitality venues. One in three businesses in our sector have no cash reserves left and are already carrying heavy debt burdens.”
The projected price rise for consumers is a result of the losses faced by the sector during the Christmas period due to fears over the omicron variant.
Nicholls added: “Many of our community pubs, restaurants, hotels and hospitality venues will therefore fail as the cost-of-living crisis bites, causing demand to falter. This can only cause the UK’s wider economic recovery to stutter.”
UK Hospitality reported that businesses in the sector are facing a 41% price increase in energy bills, 19% in labour costs, 17% in food prices, 14% in drinks prices and 21% in insurance fees.
Additionally, concerns are being raised about the return to 20% in VAT and a rise in business rates and labour costs in April this year.
“This April’s planned increases in VAT, employment costs and business rates are therefore likely to prove one financial burden too many for businesses who only then, as we come out of the quieter winter trading period, can hope to begin to start trading at full capacity once more,” explained Nicholls.
According to the trade body, four-fifths of operators have experienced more than a 39% rise in levels of cancellations since the start of 2022. Meanwhile, no-shows are an ongoing issue for the hospitality sector, and have been particularly damaging as venues have been forced to operate at reduced capacity.
“The industry wants to play its full part in the UK’s recovery from the pandemic but, as these latest figures highlight, we can only do that with further support from the government – support that must include keeping VAT at 12.5% permanently,” Nicholls added.