Despite a strong summer of trading, cost increases have forced almost three-quarters of hospitality businesses to operate at or below 85% of required capacity.
The latest member survey from hospitality trade bodies highlights the sector’s ongoing financial pressures. Tax increases have forced many businesses to reduce staffing, with 69% operating at or below 85% of their required capacity. Nearly three-quarters (73%) report having less than six months of cash reserves, including one in five with no reserves at all. In response to rising costs in April, 79% of businesses have raised prices, while more than half have been forced to cut staff numbers.
The stark results from members of the British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA), UKHospitality and Hospitality Ulster come as 84,000 hospitality jobs have been lost since the Budget, which imposed an additional annual cost of £3.4 billion on the sector.
Hospitality businesses are clear about which three measures they believe are most important to drive growth: a reduction in VAT, amend April’s changes to employer NICs and delivery of lower business rates for the sector.
In a joint statement, the trade bodies said:
“This shocking data reinforces the urgent need for Government to recognise the incredible pressure hospitality businesses have been put under, particularly since April, and illustrates why it should come forward with measures to support this vital sector at the Budget.
“Unsustainable tax increases are squeezing businesses, stifling growth and investment, and threatening local employment, especially for young people.
“It is forcing businesses across the sector to make impossible decisions to cut jobs, put up prices, reduce opening hours and sadly limit the support they desperately want to give their communities.
“Hospitality is united in which measures will reverse this trend and drive growth: a reduction in VAT for hospitality, changes to employer NICs and permanently lower business rates for the sector.
“Now is the time to act and back a vital British sector that supports the economy, jobs, and local communities. We urge the Government to do so at the Budget this autumn.”
