Soaring energy bills are threatening hospitality more than ever

Pub, hotel and restaurant owners have warned that soaring energy bills could force mass closures this winter, putting 500,000 jobs at risk. They are among scores of businesses that might have to shut or cut opening hours, but hospitality is the industry most in peril.

Thousands of entrepreneurs said it will cost them more to remain open than to close this winter, while the UKHospitality CEO Kate Nicholls said almost 10,000 businesses, many of them small and independent, could shut permanently in the next 18 months.

Staffing pressures are already causing some businesses to cut opening hours, and Nicholls added more are talking about doing so due to the energy crisis.

‘Without government support, the hospitality industry will see a catastrophic loss of businesses. Based on our experience of Covid, we can expect the closure of around 10,000,’ she said. 

As The Sunday Times explained, unlike households, businesses are not protected by any price cap, which means many are already having to pay huge sums. As yet, ministers haven’t listened, and the industry is becoming even more vocal.

On social media, Elite Bistros’ Gary Usher said: ‘We got an electric bill a few weeks ago for our unit in Chester. We kind of ignored it because we just assumed it was a misprint, like too many zeros or something…It’s not. Our electric bill for the quarter at our events unit is £26,000.’

Others responded with similar difficulties. David Pearson, who owns Mor Bakery in Stratford, said his energy bills have risen from £12,000 a year to £40,000. In May, before numbers had become quite so dramatic, Cambridge chef Alex Rushmer warned of existing, and looming difficulties in CODE.

It is small and medium-sized businesses that are suffering most, in part because many have not – many are unable to in some cases – bought energy in advance, leaving them exposed to sudden fluctuations. 

Last week, Propel reported that ‘major energy companies [have been] refusing to supply small hospitality firms over fears of them going bust – or demanding upfront payments.’ 

One pub owner in the South East, who runs about 20 sites, said his utility rates are set to rise from £500,000 to £2m. He said his energy firm won’t agree to a new contract and is worried about his pub group and the 400 people it employs.

Nicholls said she has written to the chancellor and the business secretary to urgently call for support. She has asked for a business rates holiday for all hospitality premises and the deferral of environmental levies. More broadly, the industry is continuing to press for the return of the 12.5 per cent VAT rate introduced during the pandemic.

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