Confidence in hospitality sector climbs again despite cost challenges and rates threat

By James McAllister

- Last updated on GMT

Confidence in hospitality sector climbs again despite cost challenges and rates threat

Related tags business confidence Casual dining Cga Inflation Multi-site Restaurant Business rates

The optimism of Britain’s hospitality leaders has risen for the fourth quarter in a row, but they remain concerned about inflation in key inputs, and the challenge of business rates.

The October edition of the Business Confidence Survey from CGA by NIQ and Fourth shows 49% of leaders now feel confident about the hospitality market over the next 12 months — up by four percentage points from August’s figure of 45%.

The proportion of leaders who feel optimistic about prospects for their business in the next year is unchanged at 62%.

The survey indicates important improvements at businesses that have been left fragile by Covid and the costs crisis. Only 5% of leaders say their business is currently at risk of failure — down from 11% last quarter. The number feeling pessimistic about the market has dropped from 31% in August to 18% in October.

“These figures are another vote of confidence in hospitality and a sign that trading conditions may start to ease as inflation comes down,” says Karl Chessell, CGA by NIQ’s director - hospitality operators and food, EMEA.

Looking ahead, leaders are upbeat about prospects for the crucial final quarter of the year.

Nearly three in 10 (58%) are optimistic about their businesses’ Christmas trading, with just 8% feeling pessimistic. Over a quarter (29%) of leaders say Christmas bookings are ahead of this time last year — twice the number (15%) who say reservations are down.

However, the survey also reveals widespread concerns about rising costs.

Business rates are the most pressing issue at the moment, with 57% of leaders very concerned about them ahead of possible changes in the Chancellor’s Autumn Statement, which is set to be announced later today (22 November).

There is widespread support for rate reform and relief, with 67% of leaders saying their business would be less stable if relief were removed. Significant numbers say a withdrawal of relief would force them to cut investment (71%), reduce staffing levels (61%), raise menu prices (61%) or close sites (45%).

Among other cost pressures, roughly a third of leaders say they are very concerned about energy prices (35%) and food and drink inflation (30%).

“It’s encouraging to see good levels of optimism about Christmas sales, which can make or break the year for many restaurant, pub and bar groups,” Chessell continues. 

“Despite pressure on their spending, consumers clearly remain eager to enjoy the special experiences that hospitality provides.

“However, the sector is not out of the woods yet. Costs in food, drink, labour and energy remain exceptionally high, and as the Autumn Statement approaches there is real concern about the damage that a rise in business rates would cause.

“Hospitality is a vibrant industry that makes an enormous contribution to the UK economy, but any changes to rates relief and caps would jeopardise its investment and job creation and further fuel inflation.”

Related topics Trends & Reports Casual Dining

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