Hospitality groups say sector is being priced out of existence

Hospitality trade bodies representing businesses across England, Scotland, Wales, Northern Ireland and the Republic of Ireland have called on suppliers and government to help the sector before it is too late.

At a meeting in Belfast hosted by Hospitality Ulster and attended by the SLTA (Scottish Licensed Trade Association, Vintners Federation of Ireland, UKHospitality and the Federation of Licensed Victuallers Associations, the industry bodies warned that irreparable damage is being done to one of the economy’s most important sectors through continued price increases, government inaction and failure to mitigate surging costs.

They said that faced with price increases from suppliers, increased labour costs and reduced consumer spending power, hospitality businesses have been forced to increase prices and reduce staff as many struggle to break even and others are going out of business as they simply cannot cover the costs.

The groups said that while news headlines may be showing a reduction in inflation, this is only because some consumer products have fallen while others, like alcohol, continue to rise. In essence, prices are rising slower than last year but they are still rising and still putting pressure on hard-hit consumers.

While calling on suppliers to try to absorb future increases where possible, the trade bodies have fixed their focus firmly on their respective governments, stating that the biggest cause of businesses failing was government failure to realise that the world had changed and hospitality businesses need a new taxation model to survive.

Colin Wilkinson, managing director of the SLTA (Scottish Licensed Trade Association), put it bluntly: “At what point do governments actually start to realise the pressure that the licensed hospitality sector is under here?

“We are seeing in the media that there is a steady stream of establishments going to the wall each week – pubs, bars and restaurants that have been in business for years are being lost. We all see it, they must too.

“The pandemic, the cost-of-living crisis and ever-shifting consumer trends have all had their individual impacts, yet the approach government has towards taxing the sector hasn’t moved with the new realities.

“There is no alternative. A contracting licensed hospitality sector won’t just bounce back – it is being attacked on multiple sides. Many operators are just keeping their heads above water and are financially struggling to make ends meet. We are not talking about balancing a monthly cash flow here, we are talking about the complete depletion of cash reserves and savings to try to save the last vestiges of hope.

“It’s long overdue that the entire taxation system around the licensed hospitality sector is reviewed – VAT, rates and employer costs must be reduced. These are all within the control of local and national governments.”

Mr Wilkinson added: “We are constantly forced to fight fires every single day, which leaves little time to look to the future of the sector. The odds seem to be stacked against us, and we must ask to what end? If governments tax us out of existence, then they won’t have the benefits of what we know was once a vibrant sector ever again.

“We now need to see core priority areas dealt with urgently – the picture could not be clearer about what needs to happen. Without focus on the sustainability of the licensed hospitality sector we won’t meet tourism targets, fewer businesses will mean overall reduced contribution to the government’s coffers, and taxation will have to rise again for the businesses that are left in a never-ending circle of decline.”