Only 41% of leaders currently feel confident about the hospitality market over the next 12 months, according to CGA by NIQ’s latest edition of its Business Confidence Survey, down by eight percentage points from October’s figure of 49%.
The proportion of leaders who feel optimistic about prospects for their own business in the next year has also fallen, from 62% in October to 57% now.
The falls brings to an end four successive quarters of growth in confidence, and emphasises the fragility of the hospitality sector in the wake of Covid-19 and the inflation crisis, according to CGA by NIQ.
The Business Confidence Survey found 9% of leaders believe their business is at risk of failure in 2024, four percentage points more than in October. One in 10 (10%) say their company currently has no cash reserves to draw on.
The research highlights the cost challenges hospitality business face. The majority of leaders say their wage costs increased (36%) or significantly increased (62%) in 2023, and the same total say food, drink and other bought-in costs rose (48%) or significantly rose (50%).
Many leaders also reported increases in energy (81%), insurance (80%) and rent (47%). Energy and pay costs jumped by averages of 34% and 10% respectively in 2023, the survey shows.
Respondents report average vacancy rates of 10%, and a combination of shortages and a planned increase in the National Living Wage will add more pressure to pay this year.
Rising concerns
With the Chancellor’s Budget approaching on 6 March, business leaders and industry bodies are calling for support from the Government on a range of pressures. Nearly all leaders surveyed say they are concerned to some extent by National Living Wage increases (99%), business rates (95%), food and drink cost inflation (98%), interest rates (84%) and VAT (84%).
The top three priorities for support are a cut in VAT for hospitality, full reform of business rates and a permanent lowering of the business rates multiplier.
“Hospitality is a resilient and resourceful sector, but the years of Covid restrictions and high inflation have taken a major toll. This survey shows how confidence, profit margins and reserves have all been eroded, and many operators, especially smaller ones, are now extremely vulnerable,” says Karl Chessell, director at CGA by NIQ
“Costs of doing business have soared in every area, and the case for targeted government intervention is now clear and urgent. Without relief on tax, rates and the impact of inflation on key inputs, more businesses will be sent to the wall. Hospitality can kickstart the UK’s recovery from recession, but only with the right support.”