Hospitality confidence dips amid soaring costs

Some 41% of the UK’s top hospitality groups currently feel confident about the hospitality market over the next 12 months, down by 8% since October 2023, an exclusive poll by CGA by NIQ has reported. 

The proportion of leaders who feel optimistic about prospects for their own business in the next year has also fallen, from 62% in October to 57% now.

CGA’s poll findings bring to an abrupt end four successive quarters of growth in confidence, emphasising the fragility of the hospitality sector in the wake of Covid-19 and the inflation crisis.  

The business confidence survey also found that 9% of leaders believe their business is at risk of failure in 2024 – four percentage points more than in October. Meanwhile, 10% said their company currently has no cash reserves to draw on.

The research from CGA by NIQ highlights the cost challenges besieging hospitality. Some 35% of hospitality bosses said their wage costs increased and 52% agreed that their wage costs “significantly” increased in 2023. Many leaders also reported increases in energy (81%), insurance (80%) and rent (47%).  

Karl Chessell, director at CGA by NIQ, said: “Hospitality is a resilient and resourceful sector, but the years of Covid restrictions and high inflation have taken a major toll. This survey shows how confidence, profit margins and reserves have all been eroded, and many operators, especially smaller ones, are now extremely vulnerable. 

“Costs of doing business have soared in every area, and the case for targeted government intervention is now clear and urgent. Without relief on tax, rates and the impact of inflation on key inputs, more businesses will be sent to the wall. Hospitality can kickstart the UK’s recovery from recession, but only with the right support.”

Kate Nicholls, CEO of UKH, added: “This knock to business confidence, no doubt underpinned by the relentless cost pressures operators are facing, is yet another demonstration of why the government must take action in next month’s Budget.

“It’s clear from these results that hospitality is united behind our asks of the government to lower VAT for the sector and to address looming business rates increases. We’re continuing to make representations on behalf of the sector at the highest levels of Government and I hope the Chancellor acts on 6 March.”