IT is now “inevitable” that many in the hospitality industry will have to raise their prices this year, in the face of rising costs.
That was the key finding of a new survey from trade group UK Hospitality, which found that 47% of respondents will be forced to increase their prices by over 10%, with 15% of respondents expecting to raise prices by over 20%.
Overall, the group estimated that prices across the hospitality sector will increase by 11%.
The pressure to increase prices comes as businesses face increases in energy bills (said to have increased, on average, by 41%), labour costs (19%) and drinks pricing (14%) as well as a return to the 20% VAT rate and the resumption of business rates bills – even as the sector continues to struggle with the impact of two years of poor trading.
“Omicron has infected the start of 2022 with lower-than-expected trading levels and higher than expected cancellations in hospitality venues,” said UK Hospitality chief executive, Kate Nicholls.
“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 falter. 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.”