With reduced customers due to the cost of living crises, staff shortages and soaring energy prices, added to the effects that the Covid-19 pandemic has had over the past two years, the hospitality industry is facing extreme pressure.

Although the promise of support by the government to help businesses in the sector has been made nothing has yet materialised, leaving businesses feeling uncertain and being forced to decide if they can continue to trade.

How has the Covid-19 pandemic affected the sector?

There is a misconception that the hospitality sector recovered during 2022, however briefly, however this was most certainly not the case. With the sector being one of the industries hit hardest by the pandemic, it has taken far longer to recover. The restrictions imposed on businesses during Covid-19 led to many workers leaving the sector to look for alternative employment. Added to the Brexit immigration measures that were implemented around the same time, staff shortages are rife, further dissuading talent from staying in the sector.

With so many other important areas to support, such as the NHS and the social care industry, the government has almost overlooked hospitality and has provided no specific measures to help struggling businesses in this sector recover long-term.

Cost of living crisis

There’s no doubt that the cost of living crisis is deterring people from spending money on non-essentials, such as eating and drinking outside of their homes. Even those who can afford to spend are tightening their purse strings as a precautionary measure.

This means the hospitality sector is once again trying to navigate a near impossible situation, and it is no wonder that venues up and down the UK are beginning 2023 with caution. January, February and March are notoriously the most difficult months for the industry and with surging energy prices, many venues are already resorting to opening reduced hours or even forced closures the first part of the year due to the limited bookings in preparation to ensure some balance for the year.

How businesses is the hospitality sector are supporting each other

Whilst government support is conspicuous by its absence, the sector is pulling together to support itself wherever possible. For example, Boxpark uses its experience with flexible and accessible retail locations to hire out venue space to smaller, independent restaurants, bars or cafes, which may otherwise not be able to afford a bricks and mortar presence. This model helps smaller businesses by keeping the cost of rent and utilities down, whilst potentially increasing footfall to what can be marketed as a destination venue.

As similar groups, like First Table, provide opportunities for restaurants to offer reduced priced tables between specific times in the day (for example 3pm-6pm), this is largely utilised by businesses who use the time to have meetings with clients and contacts. This is fantastically beneficial to restaurants, as those are particularly quiet times to fill a restaurant.

Additionally other hospitality businesses providers have reached out to businesses with larger workplaces in order to run onsite cafés, or provide their products to an existing one to diversify their offering and provide additional income streams.

These examples demonstrate that if hospitality businesses start to think laterally, flexibly and creatively with regard to diversifying income streams, they can put themselves in the best possible financial position for the year ahead.

Government support

Although many providers are coming up with their solutions and working collaboratively with others, the government still needs to provide specific targeted support for the sector in order for it to survive, and grow.

While the past few years have been tough for the industry, and 2023 currently appears as if it will be no different, the hospitality sector is resilient and innovative, and fully capable of overcoming the challenges on the horizon. It will continue to find ways to keep going from strength to strength.

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Melissa is an expert in licensing law including the sale of alcohol, use of premises, and running of sporting and cultural events. Specialist technical knowledge enables Melissa to deal effectively with professional disciplinary proceedings, as well as challenges to regulatory and licensing decisions on appeal.

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Published: 11th January 2023
Area: Hospitality

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