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Third of UK hospitality businesses at risk of closure due to soaring costs

More than a third of UK hospitality businesses are at risk of closure next year due to rising energy prices and inflation on the costs of goods, according to a new survey

The cost-of-living crisis has led to 77% of operators witness a fall in consumers in-store | Photo credit: Waldemar Brandt


Four UK-based hospitality trade bodies have warned that 35% of hospitality businesses in the country are expecting to be operating at a loss or become unviable by the end of the year. 

UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster said report 96% of businesses in the hospitality industry currently experiencing higher energy costs and 93% facing increased costs for food. 

At the same time as risings costs, the cost-of-living crisis has also led to 77% of operators witness a fall in consumers in-store, with 85% of businesses expecting this to this to escalate further. 

Consequently, 89% of UK hospitality businesses are pessimistic that the current levels of support offered by the UK government will protect the industry in the next six months. 

“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 that we will lose a significant chunk of Britain’s iconic hospitality sector in the coming weeks and months,” said a statement from the four organisations. 

The trade bodies suggested that further business rates relief beyond April 2022 and a VAT cut for the industry would provide consumers with ‘the confidence they need to support their local hospitality businesses’.  

In September 2022 the UK government announced an Energy Bill Relief Scheme to protect businesses from rising energy costs, offering a discount on wholesale gas and electricity prices for all non-domestic customers. 

In the same month, UKHospitality warned that the average energy price increase for hospitality businesses now sits at 238%

Collectively, UKHospitality, the BBPA, the BII and Hospitality Ulster represent coffee shops, pubs, restaurants, hotels and other hospitality venues across the UK.  

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