When the Autumn Budget 2024 was announced, the impact on the hospitality sector was immediately clear. We hear from leaders from the hospitality and events industry on the impact the autumn statement, and what they’re hoping to see in the 2025 Spring Budget.
Richard Hutton, chief financial officer, Clermont Hotel Group
The Autumn statement has placed real pressure on the hotel industry, and it comes at a time when demand has plateaued. We see the proposed changes to National Insurance Contributions as being a directly regressive employment tax. Unless changes are made to the proposals, we think it is inevitable that the industry will look at cost cutting measures, real wages will be impacted, and investment will be slowed.
We are hoping the Government reconsiders the proposed National Insurance Contribution changes and, in particular, reduces the impact of the threshold reduction by applying a lower rate of employer NICs between £5,000 to £9,100. On business rates, we hope the Government applies a lower multiplier to all hospitality businesses and moves away from the suggestion of a surcharge for properties with a rateable value over £500k. Having such a surcharge would be deeply prejudicial to larger hotels, which have faced significant cost headwinds since the pandemic and are already amongst the most highly taxed businesses.
David Hart, CEO, RBH Hospitality Management
When the Chancellor announced the changes to National Insurance Contributions, it was suggested that shareholders in companies affected would absorb some impact through reduced profits. Unsurprisingly, investors are unwilling to do so, forcing companies to identify mitigating savings elsewhere to offset the increase in costs, especially following an incredibly tough five years of minimising costs to offset the impacts of Covid and then inflation. Having yet another pressure put on hospitality businesses – which are disproportionately affected by these changes – is disappointing and ultimately leading to further negative impact on real wages and employment.
We’re still early in the election cycle, so it’s unlikely the government will feel pressured to announce any major positive measures purely for political gain. Therefore, I don’t believe we will see anything of note in the Spring Budget that aids the pressure on the hospitality industry – especially given the well-publicised and sudden shift in focus on shoring up the defense budget.
Tej Walia, managing director, Foxhills Club & Resort
The hotel industry once again finds itself in a challenging position. Rising National Insurance Contributions (NICs) present another financial hurdle for businesses that are already navigating a decline in consumer confidence, staffing challenges and shifting consumer expectations.
That is why it is vital that the government listens to our industry and our trade body, UKHospitality, ensuring that any further fiscal policy changes acknowledge the critical role our people play in the sector’s success. Any further staff costs without government support could place further strain on our businesses, already operating within tight margins.
While the budget will inevitably shape the landscape in which we operate, our focus must remain on adapting and providing for our two key audiences, for our guests and our colleagues. While it might feel that it’s the time to stall on investment, I feel we have to continue with investing in our teams and supporting them, providing more access to training, technology and improving our own processes and guest experiences.
Shonali Devereaux, chief executive, The Meetings Industry Association
The impending increase in employers’ National Insurance Contributions is compounding the already significant pressures on recruitment, retention and business viability across the business meetings and events sector. Many are being forced to reassess staffing structures, pricing strategies, and overall operational costs, with some limiting growth plans to avoid reducing staff numbers.
The sector is already grappling with severe workforce shortages, and our latest MIA Insights reveal two thirds of organisations are finding recruitment challenging. These hikes only increase the cost of employment, squeezing budgets and subsequent recruitment and retention strategies. If businesses are left with no choice but to pass on costs to clients, it risks making business meetings and events, a £16.1bn sector vital to the UK economy, less feasible.
To tackle the sector’s deepening recruitment and retention challenge, targeted incentives for training, apprenticeships and visa flexibility are essential to addressing staff shortages. With many teams operating under extreme pressure due to staff shortages, immediate action is crucial to prevent further strain on an already stretched workforce.
While the upcoming budget is unlikely to provide direct relief, we are working closely with government and continue to lobby for sector-specific support in this area. Without immediate support, the ongoing strain on event professionals will worsen, threatening the long-term sustainability of the sector.