Most UK hospitality venues operating under capacity
Two-thirds of UK hospitality businesses are running at below 85% of required capacity, according to new research.
The British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA), UKHospitality and Hospitality Ulster carried out the survey earlier this month (August). Combined, these groups’ members operate more than 14,300 hospitality sites in the UK.
The survey found that 69% of respondents were operating below 85% of required capacity. Another 73% said they have less than six months of cash reserves.
Meanwhile, 79% have had to hike their prices due to cost increases from April, when both national insurance contributions (NIC) and minimum wage went up. More than half have reduced staff numbers since April’s rise.
In a joint statement, the trade bodies stressed: “This shocking data reinforces the urgent need for the government to recognise the incredible pressure hospitality businesses have been put under, particularly since April, and illustrates why it should come forward with measures to support this vital sector at the budget.
“Unsustainable tax increases are squeezing businesses, stifling growth and investment, and threatening local employment, especially for young people. It is forcing businesses across the sector to make impossible decisions to cut jobs, put up prices, reduce opening hours and sadly limit the support they desperately want to give their communities.
“Hospitality is united in which measures will reverse this trend and drive growth: a reduction in VAT for hospitality, changes to employer NICs and permanently lower business rates for the sector.
“Now is the time to act and back a vital British sector that supports the economy, jobs, and local communities. We urge the government to do so at the budget this autumn.”
Last October’s budget is said to have added annual costs of £3.4 billion (US$4.6bn) for the UK hospitality sector.
The sector has suffered 84,000 job losses since the budget. It is also losing two on-trade sites a day.
Meanwhile, in Scotland, nearly 60% of hospitality businesses expect to make a loss and 14% are considering closure.
Business rates need to be lowered
UKHospitality has urged the government to reduce business costs to help control inflation and drive growth.
Kate Nicholls, chair of UKHospitality, said: “It’s clear the UK economy is stuck in a low-growth and high-inflation trap. The only certainty is that increasing taxes and costs would make the situation worse.
“Our latest member survey data shows that the £3.4bn in additional annual cost that hit the sector in April has forced eight in 10 hospitality businesses to put up prices – which is no doubt a factor unfortunately fuelling inflation.
“Pulling the tax lever on hospitality once again would be the worst possible thing to do. Instead, the government should lower business rates, fix NICs and cut VAT at the budget to back hospitality and stop the sector from being taxed out.”
Many in the industry fear that the next budget could bring further tax hikes.
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