One-third of hospitality firms at risk of closing
More than a third of UK hospitality businesses could fold in early 2023 because of the cost-of-doing-business crisis, new data has shown.
A new survey by UK Hospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster showed 35% of hospitality firms expect to be operating at a loss, or to be unviable by the end of 2022.
Of those questioned, 96% reported they were experiencing higher energy costs and 93% were facing food price inflation.
Furthermore, the cost-of-living crisis is being felt by consumers, the data suggests, as 77% of operators have seen a decrease in people eating and drinking out, and 85% expect this to grow in future.
A joint statement by the trade bodies said: “The results clearly lay out the stark situation facing hospitality businesses, with many on the brink due to the cost-of-doing-business crisis.
“The vulnerability of the sector due to soaring energy costs, crippling rises in the cost of goods, and dampening consumer confidence is on full display in this survey, and if urgent action isn’t taken it is looking incredibly likely that we will lose a significant chunk of Britain’s iconic hospitality sector in the coming weeks and months.”
The survey questioned 506 businesses, covering pubs, restaurants, bars, hotels and other hospitality venues.
Net confidence of those who responded is currently at -42%, 15 points lower than during the Covid-19 pandemic.
Further help ‘absolutely critical’
The trade associations have urged the UK government to deliver further help to support businesses.
“Hospitality has huge potential to be real driver of economic growth, job creation, and deliver millions to the Exchequer and our local economies,” the statement continued. “Prior to the energy crisis, the sector was showing signs of having bounced back strongly from the pandemic and looking to grow.
“If the government wants to be turbo-charging sectors of the economy, our dynamic hospitality industry is prime to grow. But it needs to survive this generational crisis first.
“Further business rates relief is absolutely critical to avoid businesses facing a cliff edge in April next year and, in the long-term, a move to cut VAT for hospitality would do wonders in giving consumers the confidence they need to support their local hospitality businesses, which are so important to our local communities and the economy.
“We would all encourage the new prime minister to work with the sector on these suggested measures and what further action can be taken to ensure hospitality continues to thrive well into the future.”