New data shows that more than 6,000 venues closed in 2023, bringing total closures since the pandemic to almost 23,0001.
The figures, from the Hospitality Market Monitor from CGA by NIQ and AlixPartners, reveal the intense pressures being faced by hospitality businesses, as they contend with a cost of doing business crisis.
Relentless cost pressures and an unsustainable tax burden on hospitality businesses have stymied investment in the sector, with the data revealing new openings in the sector have reduced for the third year in a row2.
Leading trade body UKHospitality has three critical asks of the Chancellor at the Budget to provide vital support for businesses and generate much-needed investment:
-A 3% cap on business rates increases – the proposed 6.7% increase to business rates for up to 20,000 hospitality businesses will push yet more businesses to failure. For those that survive, it will simply divert spending earmarked for investment into the higher rates payments.
-Temporary changes to employer National Insurance Contributions – a cut in the lower rate of employer NICs to 10% and increasing the threshold at which contributions are made by the employer will help businesses manage the increase in the National Living Wage.
-A lower rate of VAT for hospitality, leisure and tourism – a 12.5% VAT rate is proven to boost demand, generate revenue and keep prices low. It is the single greatest catalyst for growth in hospitality, with 70% of businesses passing through reduced prices to customers.
Kate Nicholls, Chief Executive of UKHospitality, said:
“These stark closure figures underline the seismic challenges facing hospitality businesses. It is now a case of supporting the sector or losing many businesses for good.
“It’s clear that endless price rises and an ever-growing tax burden has left businesses on the cliff-edge, and has deterred investment. Venues have had no choice but to use their cash reserves to pay bills, keep the lights on and help people remain in jobs, instead of investing in and growing their businesses.
“This is unsustainable. Cities, towns and villages are being robbed of vital assets that are essential to our local economies, but more importantly to the wellbeing of local communities.
“With the right action from Government, this can be a short-term blip and the sector can fulfil its potential in driving economic growth, attracting investment and creating jobs.
“Measures to help reduce business rates and wage bills will help businesses immediately, while a lower rate of VAT will benefit the nation, businesses and consumers for decades to come.
“I urge the Chancellor to recognise the perilous situation that lay in front of him and act now to protect businesses that truly deliver back to communities, in every part of the country.”