1 in 5 hospitality venues won't survive without support

The sector has urged the chancellor to supply immediate financial support as businesses face energy cost increases of 238%

New figures from the industry body, UKHospitality, reveal the extent of the sector's current struggle, with one in five businesses saying they will not survive the cost of living crisis. Additionally, three in five operators admit that their business is no longer profitable. 

The figures are drawn from a recent survey of hospitality operators, showing that, on top of energy prices, the cost of living crisis will cost an anticipated £25bn loss in trade, likely to result in a 15% drop in employment. This is equivalent to 383,000 jobs across the UK. 

The survey shows average energy price increases of 238% for the hospitality sector, with more than 70% of businesses seeing bills more than double, while almost 30% have been hit with hikes of over 300%. 

Such increases mean average energy costs as a percentage of turnover have jumped from 5% in 2019 to 18% today. This makes energy bills now the second largest cost (up from fifth) to businesses, a greater proportion of turnover than rent and rates combined. 

Consequently, hospitality businesses are being forced to take drastic action; three-quarters are hiking prices, more than six in 10 are reducing staff hours, four in 10 are reducing headcount and half are cutting trading hours. 

Following the survey, nearly 300 leading UK hospitality businesses have put their names to an open letter asking the new chancellor, Kwasi Kwartend, for a "plan that cuts business costs, stimulates demand and tackles inflation". 

Just Eat, Marriott International, Mitchells & Butlers, Pizza Hut UK, Caffè Nero and Merlin Entertainment are among the signatories, alongside dozens of smaller pubs, bars, restaurants and hotels in England, Scotland and Wales.

The five-point plan

The letter proposes a five-point plan of action through to April 2023, with a review early next year:

  1. A 10% headline VAT rate for hospitality
  2. A business rates holiday for all hospitality premises, with no caps applied
  3. Deferral of all environmental levies
  4. Reinstatement of a generous HMRC Time to Pay scheme
  5. Reintroduction o a trade credit insurance scheme for energy

Kate Nicholls, UKHospitality CEO, comments: "The hospitality sector is critical to our national economic and social recovery and with support will be well placed to drive growth, generate jobs and invest in local communities. To achieve this, however, the new government needs to act quickly to address the soaring energy costs that are strangling the sector.

"We are encouraged by talk of energy price freezes for families and businesses but this won't be enough to save hundreds of businesses and thousands of jobs in the sector. The package of five measures we are asking for will help us guarantee jobs and wages, to ensure that businesses stay afloat, and to preserve and grow our communities across the UK."

The new prime minister is expected to deliver an energy announcement this morning (8 September). Yesterday, Ms Truss told the House of Commons: "I will make sure that in our energy plan we will help to support businesses and people with the immediate price crisis, as well as making sure there are long-term supplies available."

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