Sector suffers ‘discernible’ drop in confidence

13-Jun-2022 - Last updated on 13-Jun-2022 at 10:37 GMT

Difficult fiscal climate: confidence plunges as fears of recession, cost hikes and war take their toll (credit: Getty/Dimensions)

Confidence levels in the future of the hospitality sector have fallen dramatically between November last year and now, according to research by accountancy firm Haysmacintyre.

According to the chartered accountant and tax advisory business, just 59% of hospitality firms say they are either ‘confident’ or ‘very confident’ about their business’s future prospects, down from 71% in November 2021.

Staff costs and recruitment remain the greatest challenge – but rising food and energy costs are becoming a significant concern for operators, as cited in the inaugural Hospitality Snapshot Survey of 2022.

Threat of recession

Haysmacintyre hospitality team partner Gareth Ogden said: “There has been a discernible decline in confidence since our last survey in November last year. This is most likely explained by the looming threat of recession and the squeeze on consumer spending – further exacerbated by knock-on effects linked to the war in Ukraine.”

Staff costs and recruitment remain the greatest challenge for the hospitality firms surveyed, with 46% ranking this as their most urgent priority. However, rising food and energy costs are now a similarly significant factor, with 33% of all businesses predicting that this would be their biggest challenge over the next six months.

The survey also highlighted customers are likely to bear the brunt of cost increases with 57% of respondents saying their predominant strategy is to pass cost increases on. It also found the vast majority (93%) of respondents reported increased staff costs as a percentage of turnover during the past 12 months.

Operators hit hard

Ogden added: “Following the pandemic, the resilience and optimism of the hospitality industry was oft-noted and frequently praised. However, this survey shows a denting of that confidence, with operators hit hard by economic and geopolitical headwinds.

“Last year, the prospect of workers returning to the office amid the multi-booster Covid vaccine programme was a cause for optimism among hospitality firms. However, despite office attendance rising and a decline in the perceived threat of new Covid variants, external factors have led to significant challenges.

“With the recruitment squeeze continuing and food and energy costs showing no signs of cooling, it is unsurprising that the sector is reflecting the wider economic concerns of the nation.”

Among the study’s findings, the number of hotels and restaurants reported being ‘not at all confident’ in their future prospects was zero in November but this has now swelled to 14% of hotels and 7% of restaurants. Furthermore, pubs and bars are reporting significantly more uncertainty, up from 8% in November to 32% now.