UKHospitality: Energy inefficiency

UKHospitality chief executive Kate Nicholls on the incredible increase in energy bills that is now threatening the industry...

Are the challenges facing the hospitality industry this summer more damaging than those that confronted us at the height of the pandemic? It’s certainly beginning to feel like it.

At a time when many operators should by now be recouping at least some of their Covid losses, they’re instead cutting the number of hours they’re open. If venues and visitor attractions, particularly those in rural and seasonal coastal locations, have reached the point where trading conditions are so prohibitive that their doors are closing early – or opening later than usual – the contract caterers supplying them will be suffering lost business too.

The problems for the whole sector have grown – and grown fast. Sadly, for some businesses they’ll soon – or may have already – become insurmountable: supply chain fragility, a chronic labour shortage, rising wages, skyrocketing costs across the board, interest rates and inflation.

But it’s the energy price crisis that looks like it’s going to prove the absolute tipping point for many in our industry, with some businesses staring in disbelief at annual bill increases in the region of 300% or above. Indeed, one Devon hotel has recently seen a fourfold increase to its £160k annual energy bill.

That’s an astonishing increase in anyone’s book, and similar hikes affecting every type of hospitality business now pose a very real, existential threat to many of them, especially smaller businesses. Yet we’re still not seeing intervention in the form of a commercial price cap, which appears nonsensical when there’s one in place for consumers.

The impact of these increases, not least from energy, on profit and viability is now abundantly clear, with businesses having to trade at 112% of 2019 sales just to make parity. For some, though, even that won’t be enough to survive such an unrelenting onslaught, while those with the resilience to do so must consider very carefully how they can keep costs down to stay afloat.

With business and consumer confidence suffering, we urgently need the government – and the Tory party leadership contenders – to outline a robust support package for the hospitality sector.

Our industry provides 10% of jobs and 5% of gross domestic product, and is the one best placed to drive the UK’s economic recovery. It needs a kickstart, though, and soon. Without one, hundreds of businesses that are currently teetering on the brink of closure will eventually topple into full-on failure, meaning thousands of job losses.

This was meant to be a summer of recovery for hospitality – we’ve certainly had the weather for it! – but my-oh-my, how fate has conspired to make for another very challenging 12 months ahead. Rest assured, though, that UKHospitality will be working harder than ever to at least limit the damage done to the sector, while at the same time advancing the argument for support for this most important of industries.

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