Hospitality firms plead for energy bill support to survive ‘dire’ situation worse than pandemic

A host of hospitality and small business bodies yesterday warned that many pubs, restaurants and hotels will not survive the “onslaught” of higher energy costs in the coming months.

Representative bodies including UK Hospitality warned politicians that unlike domestic customers, rates are not capped for small businesses.

Last week analysts at forecaster Cornwall Insight suggested firms would see energy bills rocket by as much as five times come October.

The letter, co-signed by the British Beer and Pub Association (BBPA) and other industry representatives, warned the “stasis of party politics” could not be allowed to “stifle the urgent delivery of action on energy.”

The BBPA’s chief Emma McClarkin separately said last night “the situation is dire (and) what we are experiencing now is arguably worse than the pandemic because we are receiving absolutely no relief on out-of-control energy costs.

The call for support comes amid growing concern in the City that the largest listed hospitality and retail firms’ outlooks are uncertain due to rising costs, which are occurring at the same time as disposable income is being squeezed – a perfect storm for retail and hospitality firms.

Federation of Small Businesses’ policy chair Tina McKenzie said “any cost of living plan worth the name needs to tackle the mounting energy bills small firms face,” amid ongoing rows between the Tory candidates to become Prime Minister and the Labour party over support on domestic bills.

“Inaction won’t just lead to spiralling prices but to a generation of lost businesses, jobs and potential,” McKenzie said.

In recent weeks JD Wetherspoon has issued a profit warning, with analysts at Berenberg warning “wiggle room” at the low-margin operator had been pressured by rising costs across the board.

Ivor Jones, an analyst at Peel Hunt, suggested investors were being forced to brace for the impact of higher costs on margins.

“When listed companies updated investors earlier in the year they could have reasonably expected the increase in energy costs to be a relatively short-lived spike.

Now we are firmly in the second half, with winter on the horizon, it appears that increasing energy costs are going to drag more heavily on costs.

“Some businesses, notably hotels, have been able to increase prices sufficiently to offset cost inflation. Other businesses in hospitality, those with customers under financial pressure, are going to find the next six months more challenging,”.

Investors appear to be taking note. Shares in pub group Young’s are down 24 per cent on the year, Fuller’s down 16 per cent over the same period, and Franco Manco and The Real Greek owner The Restaurant Group is trading 47 per cent down in 2022.

Last night Ros Morgan, the chief executive of the Heart of London Business Alliance, which represents businesses operating in the West End, said it would be “disastrous if businesses that were supported during the pandemic had to shut their doors now.”

Luxury hotels are not immune from the challenge presented by higher bills.

James Olivier, General Manager at Piccadilly hotel The Dilly, said he was apprehensive of the looming energy price increases.

Our hotel is in the heart of the West End meaning we truly are a 24/7 operation; therefore, we cannot make reductions and at the same time continue to give our guests the high level of service they expect,”.