A large proportion of Britain’s pubs, restaurants and hotels could go out of business by the end of the year as the costs of running their businesses become unaffordable, trade organizations have warned.
A survey of more than 500 businesses in the hospitality sector found that the vast majority are facing higher energy and food costs, leading to a sharp drop in confidence in the future survival of their firms.
Leading trade associations UKHospitalityBritish Beer and Pub Association, British Institute of Hotel Management and Hospitality Ulster united to urge Govt to provide a lifeline for struggling companies.
Unless urgent action is taken, it is very likely that we will lose a significant part of the UK’s iconic hospitality sector in the coming weeks and months
The survey found that more than a third of hospitality businesses expect to be operating at a loss or become financially unviable by the end of the year. This comes as 96% of those surveyed said they were experiencing higher energy costs and 93% complained about rising food prices.
At the same time, more than three-quarters of hospitality establishments reported seeing a fall in the number of people eating and drinking out, suggesting that cost-of-living pressures have had an impact on consumer spending, with 85% expecting the situation to get worse.
In a joint statement, industry bodies warned of a “crisis of doing business” which they said was crippling firms in the hospitality industry.
They said: “The results clearly show the dire situation facing hospitality businesses, many of which have been pushed to the brink by the cost of doing business crisis.
“The sector’s vulnerability to soaring energy costs, crippling commodity price rises and weakening consumer confidence is on full display in this survey, and unless urgent action is taken, we are very likely to suffer significant losses. piece of the UK’s iconic hospitality sector in the coming weeks and months.
“Hospitality has huge potential to be a real engine for economic growth, creating new jobs and delivering millions to the Exchequer and our local economy.”
The trade bodies, which collectively represent tens of thousands of businesses across the UK, said further cuts in business rates were “critical” to avoid companies facing the cliff next April when the new tax year begins.
They added: “In the long term, a step towards reduction VAT for hospitality would do wonders to give consumers the confidence they need to support the local hospitality businesses that are so important to our local communities and economy.”
The authorities urged the new prime minister to work with the sector on the proposed measures.
The comments came as a Michelin-starred restaurant in Whitby announced it had been forced to close due to a lack of financial support from the council during Covid.
How greedy and short-sighted is that in a place that relies heavily on tourism and hospitality?
The Star Inn the Harbor has said it will close on November 12 due to the “complete lack of support” it received from Scarborough County Council, which it says has provided business with Covid support for just two months.
Its owner Andrew Pern said: “It is with great sadness and a heavy heart that we have decided to close The Star Inn the Harbour.
“The most injurious and deplorable fact which marks their map is this [the council] took rent from us and most other businesses in town during the lockdown when we didn’t have a penny.
“How greedy and short-sighted is that in a place that depends heavily on tourism and hospitality?”
He added that the restaurant had been forced to close as the more expensive winter months approached and after a “constant battle” to work with the council since opening in 2017.
The restaurant is part of the Star Group of Restaurants, which includes the Michelin-starred The Star at Harome, The Star Inn the City and The Winter Hütte in York.
All staff at the Whitby restaurant have been offered jobs at other sites, Mr Pern said.
A spokesman for Scarborough County Council said: “We are saddened to hear of the decision to close the Star Inn the Harbor in Whitby, but it is unfair to blame us.
“We have been working closely with the restaurant for several months to ensure it can continue to trade during these difficult times.
“At the request of the restaurant, we revised the terms of its lease. These terms were agreed upon in good faith, but the restaurant recently left.
“Our local support for the restaurant was in addition to the national help it was entitled to, such as Covid grants and the government leave scheme.
“As a custodian of public money, there will always be a limit to the amount of help we can give to individual businesses.”