One third of hospitality operates at a loss, survey finds
UKHospitality, along with a number of trade associations, have cited the £3.4bn in extra costs as the reason why a significant number of businesses are losing money
One third of hospitality businesses are currently operating at a loss, representing an 11% increase on the last quarter, according to the latest survey undertaken by UKH, the British Institute of Innkeeping, the British Beer and Pub Association, and Hospitality Ulster.
UKHospitality, along with a number of trade associations, have cited the £3.4bn in extra costs – such as employer National Insurance contributions – as the reason why a significant number of pubs, bars, restaurants and hotels are losing money.
As a result, the survey participants have warned that the government’s target to hit 80% employment and high street renewal look “doomed to fail” as six in 10 hospitality businesses reported that they have had to cut jobs to save money.
Some 63% of survey respondents also reported having reduced the hours available to staff as a way to mitigate the cost increases and stay afloat.
The survey, which took place in May, showed that over half of operators said they have been forced to cancel investment and, with 76% of hospitality operators reporting they have had to increase prices, there has also been a knock-on effect to consumers and the wider economy.
In light of these findings, operators are demanding action from the government in the form of employer NIC changes, a VAT reduction for hospitality and expedited delivery of lower business rate multipliers.
A joint statement from 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 costs 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.”
