Energy bills: hospitality ‘on the brink’

Rising utility costs are pushing hospitality businesses ‘to the brink’ with some companies already facing a 500% increase in energy prices.

Two leading UK trade bodies are calling on the government to announce ‘urgent help’ after Ofgem raised the energy price cap last week.

The price cap – the maximum amount an energy provider can charge for default tariffs – will come into force on 1 October. It means a typical household in the UK will face energy bills of around £3,500 (US$4,100) annually.

The price cap does not apply to businesses, but is having a knock-on effect, the trade bodies warned.

Kate Nicholls, chief executive of UK Hospitality, said: “While the energy price cap doesn’t apply to businesses, this steep rise for already cash-strapped consumers means they’re likely to cut back on visiting hospitality venues or, worse still, stop going out altogether.

“Higher energy prices also affect our sector’s employees, who now face even higher energy bills.

“Without an urgent and comprehensive government support package that helps both households and businesses, many hospitality venues are contemplating reduced trading, resulting in lower wages or lost jobs for staff who need their jobs more than ever if they’re to heat their homes.”

Hospitality businesses have taken to Twitter to share their dismay at the rising costs. Without financial help, they argue the costs will cause winter closures as venues will be unable to pay their bills, or put many out of business altogether.

Award-winning English pub The Rose and Crown in Bebington posted a screen grab of an energy quote from British Gas. For the 12 months ending 2 September 2023, the amount totalled £61,667.94 (US$72,316.45), or £6,215.92 (US$7,290.33) per month.

Just thought I might update you on the latest ‘best’ energy deal available for a pub of our size.

We were paying 15p/unit in May. This is the best quote available today. pic.twitter.com/2r5HmCcKns

— The Rose and Crown (@RoseAndCrownBeb) August 27, 2022

Colin Wilkinson, managing director of the Scottish Licensed Trade Association (SLTA), said: “We’re already hearing of pubs and restaurants now considering closing over the winter period because they are unable to absorb recent sharp increases in energy bills.

“Already, there are reports of energy prices increasing by 300% and, in one case, just under 500% and energy providers requiring ‘bonds’ from hospitality owners looking for an alternative supplier.

“Businesses need help and they need it now. There must be an energy cap for businesses, particularly for SMEs, perhaps based on the number of employees.

“It has also been suggested that the government should introduce an energy furlough scheme to help businesses through this difficult time – in some ways, the energy crisis is having a more damaging impact on businesses than the pandemic.

“It’s no exaggeration to say that many people are facing a winter of discontent as they tighten their belts and reduce their outgoings – and it’s no different for businesses which must also find ways to save money without putting up their prices.”

Last week, a survey conducted by the Scotch Whisky Association found 57% of distillers have seen energy costs rise by 10% in the last year, while 29% have seen energy prices double.