The hospitality sector looks set to pass on double-digit price rises to customers as cost pressures increase and VAT returns to 20%, according to the latest survey by UKHospitality.
In the survey of over 340 hospitality businesses representing 8,200 venues employing 190,000 people, nearly half of operators (47%) are reporting that they will be forced to increase consumer prices by over 10% this year, with 15% anticipating hikes of over 20%. Overall, it is expected that prices across the sector will increase by 11%.
The increase is being driven by soaring operating costs, which UKHospitality says has seen energy bills increase by 41%, labour costs by 19% and food prices by 17%.
With a return to 20% VAT, plus a rise in business rates and higher labour costs proposed for this April, the sector’s plight looks set to have a significant impact on the UK’s economy.
UKHospitality chief executive Kate Nicholls, said: “One in three businesses in our sector have no cash reserves left and are already carrying heavy debt burdens. Many of our community pubs, restaurants, hotels and hospitality venues will therefore fail as the cost-of-living crisis bites, causing demand to faulter. This can only cause the UK’s wider economic recovery to stutter.
“This April’s planned increases in VAT, employment costs and business rates are therefore likely to prove one financial burden too many for businesses who only then, as we come out of the quieter winter trading period, can hope to begin to start trading at full capacity once more.
“The industry wants to play its full part in the UK’s recovery from the pandemic but, as these latest figures highlight, we can only do that with further support from the Government - support that must include keeping VAT at 12.5% permanently.”