The perilous state of the UK hospitality sector
August 31, 2022
It is impossible right now to watch a news broadcast, read a newspaper or scan through a news website without being struck by the warnings of Armageddon for our pubs, clubs and restaurants, already weakened by the pandemic. Calls for immediate and targeted help from the government for the hospitality sector are multiplying and escalating.
Energy prices
The main focus is of course the savage rise in energy prices, where the lack of a price cap for businesses means that quotes for the renewal of expiring energy contracts are coming in at multiples of what has been paid up to now, in some cases the increases are as high as six times the previous price. Not many hospitality businesses can survive that scale of financial shock. A survey by the Society of Independent Brewers has revealed that 70% of our pubs don’t expect to survive the winter.
Labour market
As well as energy, other input costs are soaring, labour rates to recruit or retain staff have exploded, while the lack of staff capacity is damaging the standards customers can be offered and the hours that businesses can be opened. All the while, the cost of living crisis is limiting the willingness and the ability of customers to eat and drink out.
Hospitality Market Sector Report 2022
The current state of the hospitality sector
This nightmare scenario prompted us to look at the finances of the sector as it battles to cling on through this new crisis to see what little fat might be left on the bones of hospitality company balance sheets.
The picture is more encouraging in some respects than we expected, but within the numbers, red lights are flashing to flag up some really worrying vulnerabilities.
Not only are whole swathes of hospitality managers and staff shell-shocked from what they have been through, but very few executives have the necessary experience of these recovery situations to choose the right options and implement the tough actions that are now both essential and urgent.
Help is available for those in the hospitality sector facing difficulties. Getting the earliest possible independent expert advice from turnaround and restructuring professionals will be a vital for the survival of many hospitality businesses.
If you are affected by any of these issues, you can book a confidential chat without charge or obligation.
As a Group, Opus is here to advise and help businesses facing problems with cash flow, debt and business finance. We have extensive experience of identifying and implementing positive solutions in these scenarios. We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.