Hospitality leaders warn of potential winter closures

Soaring energy costs could prompt business closures this winter if the government doesn't provide more support according to hospitality trade bodies.

UK hospitality chiefs have warned of a massive industry shutdown this winter if the government doesn't provide "immediate" support in the form of reduced VAT or an energy price cap for customers.

In a joint open letter to Boris Johnson, Chancellor Nadim Zhawi and Business Secretary Kwasi Quarteng, major UK hospitality trade groups called for "immediate action" on energy bills, saying the government "should not allow the stagnation of party politics to prevent the immediate delivery of action on energy". With pubs, restaurants and hotels already battling to stay afloat due to rising inflation, supply chain issues and labour shortages, a further increase in energy costs could prove catastrophic for the sector.

According to the letter signed by UK Hospitality, the Night Time Industries Association, the British Beer and Pub Association, the British Institute of Innkeeping and the Music Venue Trust, businesses are facing an average growth of 300 pcs under the new energy deals introduced this Autumn as old tariffs expire. The letter warns Prime Minister Boris Johnson that "not all businesses will be able to survive this onslaught."

Although ministers have been engaging with hospitality bosses for weeks, Government insiders say the cabinet has agreed not to make any significant announcements until a new Conservative leader is elected. However, the Department for Business, Energy and Industrial Strategy said on Friday that it is considering a subsidy bill to support energy-intensive industries, such as glass, ceramics and paper, to protect up to 60,000 jobs. As of yet, there are no immediate signs of similar support for the hospitality industry, which is similarly struggling.

A recent survey has shown that one in four hospitality bosses are considering closing their businesses due to the rising cost of energy bills. The hospitality sector provides 10 per cent of UK jobs and is responsible for 5 per cent of GDP, so any closures would significantly impact the economy. However, with prices continuing to rise and no price cap for commercial contracts, businesses are struggling to find ways to stay afloat. This has resulted in many hospitality companies devising plans to reduce their energy consumption, such as closing spas or mothballing some floors. For businesses that rely heavily on energy, these choices may be the difference between staying open and closing their doors for good.

Some energy firms have announced they are pushing for a bailout fund to cut household bills. For example, Scottish Power and Eon have proposed a plan to cap bills at current levels for two years and make up the shortfall with wholesale energy prices through billions of pounds of loans from banks. The loan would be repaid over 10 to 15 years and funded through levies on consumer bills or taxation. Suppliers have said they will continue to do everything possible to support customers, but the scale of these bills is beyond the industry's ability to provide all the necessary relief.

As Autumn approaches, if you're one of the businesses facing the challenge of renewing your energy contracts, Beacon is here to help. We work with several brokers and can support you in your search for the best deal. We can also liaise with the experts to provide a range of energy reduction solutions that may assist you in lowering your costs. So, if you are seeking professional assistance with your energy contract renewal, please do not hesitate to contact us. Although there is no simple remedy due to it being a nationwide issue, we will do all we can to ensure you receive honest, transparent and practical advice based on the current market conditions and forecasts for the future.

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