Surge in energy costs forcing businesses to raise prices and cut hours

By BigHospitality

- Last updated on GMT

Surge in energy costs forcing businesses to raise prices and cut hours

Related tags: ukhospitality, Inflation, Vat, Hospitality

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

While energy prices are rising by an average of 95% the survey findings show that one in 10 hospitality businesses are seeing energy price increases of more than 200%. Those that have seen little change (12%) are likely to be on fixed contracts.

Of those businesses that have attempted to renegotiate their contract, over half (55%) have been refused. More than a quarter (26%) say they are unable to get a quote or a reasonable quote from an alternative supplier.

Almost half of respondents (47%) say they were offered a contract, but that the rate was too high. A third of respondents 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 say: “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.

“It is imperative that 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.”

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 are set to hit the hospitality sector hard. Covent Garden-based Middle Eastern flatbread restaurant Manakish & Naanza announced it would be closing its doors temporarily​ due to the recent hike in food and fuel costs.

The poll received more than 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.

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