Confidence amongst hospitality leaders has been ”beaten down” by severe cost pressures, a recent survey shows.
CGA by NIQ’s latest edition of the Business Confidence Survey shows 41% of those surveyed currently feel confident about the hospitality market over the next 12 months.
This is down by eight percentage points from October’s figure of 49%.
The proportion of leaders who feel optimistic about prospects for their own business in the next year has also fallen, from 62% in October to 57%.
Meanwhile, 9% of leaders believe their business is at risk of failure in 2024, whilst 10% say their company currently has no cash reserves to draw on.
The research highlights the cost challenges besieging hospitality, CGA by NIQ notes.
“Hospitality is a resilient and resourceful sector, but the years of Covid restrictions and high inflation have taken a major toll. This survey shows how confidence, profit margins and reserves have all been eroded, and many operators, especially smaller ones, are now extremely vulnerable,” said director, Karl Chessell.
”Costs of doing business have soared in every area, and the case for targeted government intervention is now clear and urgent. Without relief on tax, rates and the impact of inflation on key inputs, more businesses will be sent to the wall. Hospitality can kickstart the UK’s recovery from recession, but only with the right support,” he added.
Furthermore, the large majority of leaders say their wage costs increased (36%) or significantly increased (62%) in 2023, and the same total say food, drink and other bought-in costs rose (48%) or significantly rose (50%).
Many leaders also reported increases in energy (81%), insurance (80%) and rent (47%).
Energy and pay costs jumped by averages of 34% and 10% respectively in 2023, the survey shows.
Respondents report average vacancy rates of 10%, and a combination of shortages and a planned increase in the National Living Wage will add more pressure to pay this year.
Nearly all leaders surveyed say they are concerned to some extent by National Living Wage increases (99%), business rates (95%), food and drink cost inflation (98%), interest rates (84%) and VAT (84%).
The top three priorities for support were a cut in VAT for hospitality, full reform of business rates and a permanent lowering of the business rates multiplier.
With the Chancellor’s Budget approaching on 6 March, business leaders and industry bodies are now calling for support from government on a range of pressures.
Kate Nicholls, chief executive of UKHospitality, said, “This knock to business confidence, no doubt underpinned by the relentless cost pressures operators are facing, is a yet another demonstration of why the Government must take action in next month’s Budget.
“It’s clear from these results that hospitality is united behind our asks of the Government to lower VAT for the sector and to address looming businesses rates increases.
“We’re continuing to make representations on behalf of the sector at the highest levels of Government and I hope the Chancellor acts on 6 March.”
