Grim outlook for hospitality industry as energy prices soar

Monday, June 5, 2023

Only less than a third of UK hospitality businesses remain optimistic about their future as they face significant challenges due to soaring energy prices, higher food costs, and increased wage bills, according to industry bodies

Data collected by CGA by NielsenIQ on behalf of the British Institute of Innkeeping, the British Beer and Pub Association, UKHospitality and Hospitality Ulster paints a grim picture of the current crisis in the hospitality sector.

Rising energy prices have hit pub, bar, and restaurant owners particularly hard, having been at "breaking point for a year now," with average increases of 81% over the past year. This is in addition to the mounting pressures of escalating food costs and wages.

While wholesale gas prices have recently eased, dropping to their lowest levels since the conflict between Russia and Ukraine began in February 2022, the overall outlook remains challenging for the industry.


Urging continued support

Representing the country's largest hospitality industry groups, the four bodies prompted a plea to the government for additional support.

The groups highlighted the negative impact of the crisis, stating that it not only cripples businesses in the present but also has lasting repercussions for local employment, supply chains, and community hubs across the UK.

The disappearance of over 150 pubs during the first three months of 2023, a 60% increase compared to last year, adds to the alarming situation.

"No profits means nothing to invest back into businesses, no cash reserves means nothing to fall back on, and businesses being forced to close means important, irreplaceable assets being lost from local communities and economies across the country forever," they wrote

in a statement.

In response, the government claims to have assisted the hospitality sector, including freezing alcohol duty, reducing energy bills, a £13.6 billion business rates relief package, and a £2.4 billion fuel duty cut.

Despite the initial support, the groups emphasise the need for continued assistance to ensure the survival of businesses in this critical industry.