Cost Increases Impact UK Hospitality Sector Capacity, Survey Shows

A survey conducted by the British Institute of Innkeeping, the British Beer & Pub Association, UKHospitality, and Hospitality Ulster indicates that 69% of hospitality businesses are operating at or below 85% capacity. The survey attributes this to increased costs, including tax rises, which have led to significant workforce reductions.

The survey also highlights financial challenges faced by the sector, with 73% of respondents reporting less than six months of cash reserves, and 20% having no cash reserves at all. In response to cost increases implemented in April, 79% of businesses have raised prices, and more than half have reduced staff numbers.

Since the Budget, which imposed an additional annual cost of £3.4 billion on the sector, approximately 84,000 hospitality jobs have been lost. The trade bodies involved in the survey emphasize the need for government intervention to support the sector.

The survey outlines three key measures that businesses believe are essential for growth: reducing VAT, amending changes to employer National Insurance Contributions (NICs) from April, and implementing lower business rates for the sector. These measures are seen as critical to reversing the current trend and promoting growth within the industry.

The trade bodies have issued a joint statement urging the government to recognize the pressures faced by the hospitality sector and to introduce supportive measures in the upcoming Budget. They argue that the current tax increases are hindering growth and investment, threatening local employment, particularly for young people, and forcing businesses to make difficult decisions such as cutting jobs, raising prices, and reducing operating hours.