The UK hospitality sector is a vital industry that has faced considerable financial and operational pressures over the last four years.
The hospitality industry is a vital sector that contributes 4% of GDP, some 74bn in gross added value. Yet, in the current economy, it is one of the most affected sectors for business closures with 13%, or 14,932, of hospitality sites lost since before the pandemic. Of these closures, 77% were smaller, independent businesses, which reveals the great strain on pubs, bars, clubs and restaurants throughout the UK.
The resilience of the hospitality sector is undeniable. Despite the huge disruption over the last four years, enterprising entrepreneurs have changed their business models at breakneck speed to preserve their businesses. Unfortunately, external support from the Government, particularly in the form of affordable business rates, has not been forthcoming. This issue added to the rising cost of running a hospitality business, supply chain disruption, labour shortages and a reduction in revenue caused by the cost of living crisis has left the hospitality sector fragile.
In our most recent Hospitality Market Sector Report, which you can view below, we analysed data from financial health monitoring specialists, Company Watch. This showed that the average financial health score for the industry overall was 33 out of a maximum of 100 compared to the economy as a whole, which is close to 50. This figure is down 2 points from August 2022, highlighting the significant impact the challenges of the last year have had on the sector.
Business challenges faced by the Hospitality sector
- Increased costs due to inflationary pressures coupled with reduced consumer spending
- Recruitment in a reduced labour market
- Repaying Bounce Back Loans from the pandemic and other debt
- Negotiating with landlords on rent arrears and future rents
- Dealing with potential supply chain disruption from Brexit
- Downsizing property portfolios where locations are no longer profitable
- Repairing balance sheet damage caused by falling property and other asset values
- Making sure the business is both solvent now and viable for the future
- Accommodating higher staff salaries
- Staying nimble in a changing leisure and hospitality environment
- Reflecting evolving food trends and eating habits
- Securing adequate funding for growth opportunities
- Producing realistic financial forecasts in a turbulent market
Helping businesses in the Hospitality sector
Partners and staff across the various Opus service lines have extensive experience and knowledge of the hospitality sector. We will always work with you to support your business.
If you would like to hear more about how we can help your business to best manage any current challenges, please contact us at or call us at our nearest office to you.
Market Sector Report
The UK hospitality sector report – finances falter as Christmas approaches
How is the UK hospitality market responding to current economic pressures as we approach the festive season?Read the Report