Energy costs force hospitality firms to raise prices and cut hours

“Soaring” energy costs are forcing some hospitality businesses to raise their prices and cut trading hours, according to a new survey by four leading hospitality trade bodies.

The joint poll by trade organisations UKHospitality, the British Institute of Innkeeping (BII), the British Beer and Pub Association (BBPA) and Hospitality Ulster revealed that 76% of businesses are mitigating skyrocketing energy costs by reducing their gas and electricity usage and raising prices, while 38% have cut their trading hours.

The associations said average energy price increases of 95% are the latest hurdle the hospitality sector must negotiate as it struggles to recover from the devastating effects of Covid. The others are impending business rate rises, rent increases, chronic staff shortages, rising raw goods costs, plus the prospect of a return in April to 20% VAT for the industry.

The poll received just over 300 responses from businesses operating 6,000 venues, and which are members of the four organisations. Of the businesses that responded, 79% had three or fewer sites.

Other survey findings showed that one in 10 hospitality businesses are seeing staggering energy increases of more than 200%. Those that have seen little change (12%) are likely to be on fixed contracts.

Of those businesses that attempted to renegotiate their contract, over half (55%) had been refused. A third had not tried to recontract. More than a quarter (26%) said they were unable to get a quote or a reasonable quote from an alternative supplier, nearly a third saying the energy company was not supplying to the hospitality sector.

It also found almost half of respondents (47%) said they were offered a contract, but that the rate was too high; while close to a third who failed to get a reasonable quote were told it was due to them being in the hospitality sector.

Reacting to the findings, UKHospitality, the BII, the BBPA and Hospitality Ulster said: “These astonishing energy price increases are a cruel blow to the thousands of hospitality businesses across the UK desperately trying to rebuild and recover some of the losses they suffered during the pandemic.

“That they should strike just as operators could see light at the end of the tunnel will be particularly painful – imagine having to hike your prices while trying to tempt customers back to your venue and being forced to open late or close early, with the subsequent loss in wages to staff. It’s truly punishing.”

They added: “It is imperative that the Government takes action to support the sector – by extending the reduced rate of VAT beyond April 2022 and working with the sector to ensure that supply is guaranteed and that cost pressures are mitigated.”