Only 1 in 3 firms optimistic about future as energy costs soar by 80%

30-May-2023 - Last updated on 30-May-2023 at 09:42 GMT

Crippling costs: the survey of hospitality operators shows the average energy bill has rocketed by 81% since 2022 (image: Getty/Nando Vidal)

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Just 29% of hospitality businesses are optimistic about the next 12 months with energy cited as their biggest concern, new data has showed.

The survey asked hospitality business owners about their operations and prospects with the energy crisis highlighted as the largest worry.

Some 86% of respondents were concerned or very concerned about energy costs and the average bill increased by more than three quarters (81%) since last year and three times more than 2021.

The data was collected by CGA by NIQ on behalf of UKHospitality (UKH), the British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA) and Hospitality Ulster.

It also found firms forced into long-term fixed rate contracts between July and September last year felt the least optimistic about the next 12 months.

No end in sight

Of the firms locked into a contract at the peak of the energy crisis between July and September 2022, more than four in 10 (46%) felt their business was a risk of failure in the next 12 months with the large majority (92%) of these citing energy prices as a ‘significant contributor’ to that risk.

These companies were also less likely to have cash reserves and nearly half (46%) of all respondents had less than three months’ worth.

A joint statement from the trade bodies said: “The Energy Bill Relief Scheme has provided a short respite but with that falling away last month, businesses are back to paying high costs with no end in sight for the thousands locked into contracts who will be obligated to pay extortionate rates well into next year.

“The Government must recognise this crisis isn’t just crippling businesses now. Left unresolved it will have a lasting wider impact long into the future, impacting local employment, supply chains and removing essential community hubs from villages, towns and cities across the whole of the UK.”

The alliance of organisations called for the Government to insist suppliers to offer renegotiation to businesses locked into long-term, high-cost contracts, while businesses on the brink should be offered direct, targeted support.

Losing battle

“The people running pubs, bars and restaurants in neighbourhoods across the UK want to remain there and provide the absolute best for their communities but feel they are fighting a losing battle, they need support now,” the statement added.

Furthermore, those surveyed also cited VAT relief and wholesale reform to business rates as longer-term measures that would support the sector and enable business growth and investment.

Research from real estate expert Altus Group earlier this year (April), showed more than 150 pubs disappeared from England and Wales in the first three months of 2023.

The data revealed the rate of pubs demolished or redeveloped for other purposes rose by almost 60% at the beginning of the year, attributed to rising energy bills.