The pandemic has forced the hospitality sector to close its doors for the best part of 12 months. These periods of closure have caused rising levels of debt and along with the pressure of increased costs have resulted in many businesses increasing their customer prices.

A recent survey of business leaders has revealed that 48% of pub, restaurant, and QSR sectors have raised their prices since reopening to protect the future of their business.

The main reasons why many hospitality businesses are doing this are:

  • Supply issues
  • Social distancing measures affecting profits
  • Customer’s not showing up for bookings

 

Supply issues

Since outdoor trading began on 12 April 2021, 63% of survey respondents said they have experienced some supply issues.

 

Social distancing

21% of those surveyed believed that the social distancing measures currently in place will result in them making a loss because this impacts the number of covers they are able to offer. 44% of those surveyed believe they will start to make a profit from 17th May 2021 when restrictions start to ease.

 

Customers not showing up for bookings

Customers not showing up for bookings continue to be a major issue for the hospitality industry, especially when bookings are essential during the pandemic in order to get a table. The latest research from the CGA found 8% of consumers have admitted to not showing up for bookings. The actual number is likely to be significantly higher. This is resulting in many hospitality businesses losing money. However, this a very difficult issue to solve and businesses may need to think of different ways to minimise the level of no-shows and to make it easier for customers to cancel reservations so they can reallocate the space.

 

UK Hospitality suggest more targeted loan system to the Treasury

UK Hospitality has suggested in a letter to the Treasury that they should work together in order to develop a more targeted loan system that recognises the unique issues the hospitality sector face as we move ever closer to the end of the pandemic. This is because banks are denying many hospitality businesses access to the critical loans they need in order to get back on their feet.

The hospitality sector is ready to help the economic recovery and will boost employment levels over the coming months. However, many hospitality businesses have significant debt including back rent and other business costs. Access to capital is essential to help them recover as quickly as possible.

 

Conclusion

To conclude, many hospitality businesses have been forced to increase customer prices in order to increase profit and hopefully safeguard the future of their business. Ongoing issues include supply issues, COVID restrictions limiting customer numbers, recruitment difficulties, and customers not showing up for bookings.

With many hospitality businesses requiring further support, UK Hospitality has proposed developing a targeted loan system to ensure the hospitality sector can recover to full strength.

 

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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