New figures show operating costs now account for 55.2% of turnover in hospitality businesses
NEW reports have identified Glasgow and Edinburgh as being among Britain’s most vibrant cities in terms of hospitality revenues – while highlighting the continued challenges faced by businesses across the sector.
CGA’s Top Cities research looked at sales data from hospitality and leisure businesses across the UK in the first half of the year, with the company assigning each city a “vibrancy ranking”.
Glasgow emerged at the top of the list, with Edinburgh in seventh place.
However, while the report highlighted sales growth, CGA director Chris Jeffrey said that, due to “huge inflationary pressures”, real-terms growth has been “difficult”.
That was reinforced by a separate study from UK Hospitality and property firm Christie & Co, which reported that hospitality business operating costs now account for 55.2% of turnover, before rent.
Costs have been driven by increases in overheads including utilities.
In the survey of 5000 businesses across the UK, which covered the six months to December 2021, 39% of respondents predicted moderate growth in their profitability during 2022, with 6% predicting significant growth in profitability. Just under a third – 31% – predicted a moderate contraction in profits, with 6% predicting a significant contraction.
Of the companies polled, 18% predicted profits for 2022 would be “broadly flat”.
This was despite more than 70% of respondents predicting growth in turnover (61% moderate, 10% significant).
UK Hospitality chief executive, Kate Nicholls, said the survey “highlights the extreme pressure that hospitality operators are labouring under, with costs soaring to a new record high”.
“We have been working with government to make clear the harm this is causing to our ambitions for growth, investing in high streets and creating skilled roles,” said Nicholls.
“It’s imperative that government takes action to help us tackle the inflationary headwinds we face, unlock growth by removing regulatory barriers and creating a tax and investment framework for the future.”
