Hospitality industry facing ‘crisis of confidence’, says UKHospitality CEO

Hospitality business confidence has fallen to its lowest level in two years in the shadow of April cost increases.

 

The sector is due to be hit by a £3.4b price hike as a result of hikes to national minimum wage and employers’ National Insurance Contributions (NICs).

 

The changes to employers’ NICs alone will cost an additional £1b per year as it will bring 774,000 hospitality workers – a fifth of the industry’s workforce – into the threshold for the first time.

 

Cross-party politicians hit out at government plans to raise the tax in 2025 in December last year during the second reading of the NIC bill, warning the move would be “catastrophic” for hospitality. 

 

Only 14% of businesses said they felt optimistic about the hospitality market in a recent Business Confidence survey conducted by CGA by NIQ.

 

Business confidence among hospitality operators was also at its lowest level since October 2022, when inflation was at a 40-year-high.

 

UKHospitality has urged the government to delay the reduction in the employer NICs threshold at the Spring Forecast, which is taking place later this month.

 

The trade body has also called for the government to provide the maximum possible discount to hospitality businesses in relation to business rates reform.

 

Kate Nicholls, chief executive of UKHospitality, said: “Hospitality is facing a crisis of confidence like we haven’t seen since we were in a full-blown energy crisis and inflation was running at over 10%.

 

“The enormity of the cocktail of costs being simultaneously imposed upon venues is unprecedented and, for many, completely unsustainable.

 

“It will simply force businesses to cut jobs, freeze recruitment, cancel planned investment, reduce trading hours and, in the worst-case scenario, close their doors for good.”

 

She added: “These tax increases may well deliver sizeable receipts for the Treasury, but will hit the economy, jobs, communities and the government’s drive for growth just as hard, and stifle a sector that has historically played a huge part in the nation’s recovery following times of economic downturn.

 

“At a time when we have seen how hospitality can drive economic growth, as it has done in the past two months, we are urging the chancellor to act swiftly. Delaying the changes to the employer NICs threshold will prevent much of this hardship and allow hospitality to continue on a path to growth.”

 

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