1 in 3 firms at risk of going bust
Analysis of a new survey by trade bodies UKHospitality (UKH), the British Beer & Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster showed 35% of participants were anticipating operating at a loss or being unviable by the end of 2022.
Furthermore, the large majority (96%) were experiencing higher energy costs and a similar proportion (93%) were facing food price inflation.
The Q4 Hospitality Members’ Survey from the four organisations, covering more than 500 hospitality firms including pubs, also found more than three quarters (77%) had seen a drop in people eating and drinking out with more (85%) expecting this to worsen in the months ahead.
As a result, 89% were not confident or pessimistic the current levels of Government support would protect the sector in the next six months.
Business confidence
In addition, business confidence has fallen to a lower proportion than at any point during the pandemic by 15 points to 42%.
A joint statement from the trade associations said: “The results clearly lay out the stark situation facing hospitality businesses with many on the brink due to the cost of doing business crisis.
“The vulnerability of the sector due to soaring energy costs, crippling rises in the cost of goods and dampening consumer confidence is on full display in this survey and if urgent action isn’t taken, it is looking incredibly likely we will lose a significant chunk of Britain’s iconic hospitality sector in the coming weeks and months.”
It went on to say the industry has “huge potential” to drive economic growth, job creation and deliver millions to the Exchequer and local economies.
Generational crisis
The statement added: “Prior to the energy crisis, the sector was showing signs of having bounced back strongly from the pandemic and looking to grow.
“If the Government wants to be turbo-charging sectors of the economy, our dynamic hospitality industry is prime to grow but it needs to survive this generational crisis first.”
The trade bodies called for further support for the sector to help companies in the long and short term.
“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,” the statement said.
“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.”
