Another Energy Price Hike, what does this mean for Hospitality Businesses?
Four of the UK’s largest hospitality industry groups have come together to issue a plea to the Government. UK Hospitality, British Institute of Innkeeping, the British Beer and Pub Association and Hospitality Ulster have said in a statement: “The government must recognise this crisis isn’t just crippling businesses, left unresolved it will have a lasting wider impact long into the future.” This comes as The Energy Relief Scheme ended last month and hospitality businesses found themselves facing even greater costs.
Inflation is a huge pressure on the finances of hospitality business. The highest risers affecting inflation are consumer goods and energy, the two factors critical for restaurants bar and nightclubs in particular. Government inflation graphs show food prices were 19.1% higher in March 2023 compared to a year prior. Domestic gas prices increased by 129% and domestic electricity by 67%. With all these increase specific to the industry, costs are becoming untenable for businesses.
86% of hospitality businesses are worried about energy costs, according to newly collected data. And the first quarter of 2023 saw 150 pubs close in England and Wales, a 60% increase on last year. These costs are causing the very landscape of our high streets and local communities to irreparably change.
The pressures are piling up on pubs and nightclubs, with the train strikes compiling issues. Pub chains have blamed the strikes and disruption for a loss of sales totalling £4 million. Labour shortages and UK VISA – Brexit issues are causing struggles; the outlook looks bleak for nightclubs with only god summer weather offering signs of positivity.
What is the government doing to help inflation and hospitality businesses?
The government have listed on their website a number of policies which will include support, however all affect households and not non-domestic customers.
However the Energy Bill Relief Scheme, set to end, has been revamped into the Energy Bills Discount Scheme.
What is the Energy Bills Discount Scheme?
The Energy Bills Discount Scheme is set to run for 12 months from 1st April 2023 to 31st March 2024. It involves three parts:
- An automatically applied discount for non-domestic energy consumers.
- An increased energy discount for non-domestic consumers on a fixed contract. (This is only available for certain SIC sectors, see if you are eligible here.)
- Discount for heat suppliers (does not apply to hospitality businesses).
Eligible non-domestic customers will be receiving a discount should expect to see it in their May bill.
Who is eligible for the Energy Bills Discount Scheme?
Eligible consumers include businesses, charities or public sector organisation who are on an existing fixed price contract that was agree on or after December 1st 2021. Eligible organisations also include those on new fixed price contracts, variable tariffs, and flexible contracts.
The discount is applied per unit, and is subject to a maximum discount. We recommend hospitality businesses continue to shop around to try to get the best deal.
Is the government support for hospitality good enough?
No.
The support does not go a long way to instil confidence in struggling nightclub and pub operators, perhaps fully expecting to have to close or reduce their hours in the coming months.
Hospitality recorded a drop of 4,809 premises across the whole of 2022 with more than three quarters shutting their doors in the second half of the year. Indeed, almost 90% businesses that closed in the fourth quarter were independents – small businesses weakened by the impact of COVID were forced to close.
Where is the financial support for nightclubs and bars?
The first step to acquiring financial support for nightclubs and bars is to outreach for partners and to use a broker. Industry leaders such as the NTIA, and us at NDML, are dedicated to helping hospitality businesses survive and flourish.
We will provide information and updates on the most recent policy changes, legislation and financial support opportunities from across the industry. We will work with councils and industry bodies to deliver hospitality businesses the support they require, listening and lobbying the government for relevant change.
Visit the NTIA for more information, and register your interest with us at NDML to start a relationship with the UK’s top independent nightclub broker.