Over a third of the UK’s hospitality sector is at risk of business failure in early 2023 due to soaring energy costs and the rise in the cost of goods, according to a new survey by UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster.
The organisations’ joint Q4 Hospitality Members’ Survey showed that 35% of respondents were expecting to be operating at a loss or be unviable by the end of the year, with 96% experiencing higher energy costs and 93% facing food price inflation.
The impact of the cost-of-living crisis on customers is also being felt, with over three-quarters of operators (77%) seeing a decrease in people eating and drinking out, and 85% expect this to worsen going forward.
Consequently, 89% of operators are either not confident or pessimistic that the current levels of support offered by the government will protect the industry in the next six months.
Additionally, uncertainty around rising inflation, future regulation and staffing is impacting confidence among business owners, and business confidence has dropped lower than at any point during the pandemic.
In a joint statement, the trade associations said: “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.
“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.”
They added: “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.”
