A third of UK hospitality operating at a loss
A survey of the UK hospitality industry found that a third of businesses are operating at a loss, an 11 percentage point increase on the previous quarter.
Industry bodies UKHospitality, The British Institute of Innkeeping, the British Beer & Pub Association and Hospitality Ulster conducted the survey last month (May).
It revealed that a third of their collective members – in pubs, bars, restaurants, and hotels – were operating while losing money.
Furthermore, six in 10 reported that they have had to make job cuts. Meanwhile, 63% have lowered staffing hours to stay afloat after the increase in national insurance contributions (NIC) and minimum wage from April.
The hospitality sector is now facing an annual increase of £3.4 billion (US$4.4bn) in costs. This is broken down into £1.9bn (US$2.46bn) in wage costs, £1bn (US$1.29bn) in employer NICs, and £500 million (US$646.9m) in business rates, as a result of relief being lowered from 75% to 40%.
Since the increases came into effect, more than half of operators surveyed said they’ve had to cancel investment. Additionally, 76% reported having to increase prices.
Many in the sector are urging the UK government to act, with calls for a reversal of employer NIC changes, a VAT reduction and expedited delivery of lower business rate multipliers.
Reduce the tax burden
A joint statement by the trade bodies said: “The government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector.
“Hospitality is vital to the UK economy but is under threat from ongoing cost rises, which the April increases have only exacerbated. Jobs are being lost, livelihoods under threat, communities set to lose precious assets, and consumers are experiencing price rises when wallets are already feeling the pinch.
“The government must act urgently to mitigate the changes to employer NICs and also deliver on its promise of root and brand business rates reform.
“The overall tax burden on our sector must be reduced, including consideration of the long-standing ask of a VAT cut for the sector, so the hospitality industry can return to investment, job creation, and growth in communities the length and breadth of the country.”
Another survey carried out by Bionic earlier this year found that nearly half of hospitality business owners in the UK believe they won’t survive the year.
Despite all the doom and gloom, however, there are still bright spots in the UK’s spirits sector.
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