Speaking at the trade body's summer conference yesterday (7 June), Nicholls said the Government had helped make the hospitality sector less attractive for investment over the last two years.
“The level of debt the sector is carrying impacts the economy as a whole, because the sector is a driver of the economy,” she said, during a panel session discussing opportunities for investment in the market.
“The margins are squeezes and the demand bouncing back is not translating into profitability.”
Fellow panellist and Risk Capital Partners co-founder Luke Johnson similarly said the cost of living crisis will force consumers to cut back on eating and drinking out, adding that the next two years will be harder than the past two.
“You can never forget we are a discretionary spend,” he commented.
“Many businesses have been battered psychologically.
“People are going to have to save to pay rent. We are in denial.”
Johnson mentioned that while QSR and bigger businesses are better placed to navigate the challenges facing the sector, exceptional businesses with 'differentiated propositions and entrepreneurial management' will survive.
Panellist John Miesner, MD at Interpath Advisory, echoed Johnson’s comments and said businesses that have a 'standout proposition' will receive investment.
“There is every shade of capital to help people achieve what they want to achieve,” he said, adding that investors look for 'businesses with a coherent story that will generate a return'.
Jim Turner, corporate relationship director at Barclays, also mentioned companies with 'sustainable revenue' will continue to attract investment.
Nicholls added that tax breaks and reduced business rates will increase confidence in the sector, with Treasury intervention necessary to reassure banks.
“The Government are an investor in our sector given that they spent £39bn bailing us out,” she said.
“They need to urgently get a grip on this…and be looking at how they can sustain consumer spending.”