Hospitality faces ‘perfect storm’ in 2023 as ministers look at halving energy bill support

Ministers have been warned hospitality firms face a “perfect storm” in the first months of 2023 as the Government considers halving support for businesses’ energy bills.

The Chief Executive of UK Hospitality also claimed rail strikes cost the sector around £1.5billion in December alone and was “more significant” than anticipated.

Going into the New Year and a typically quieter period for hospitality, Kate Nicholls stressed the first three months of the New Year will be “very tough”.

Speaking on BBC Radio 4’s Today programme, she said 2,500 premises had closed in the final months this year as she predicted the trend will continue “in quarter one because of the high cost of doing business”.

The industry boss said soaring energy bills, inflation, and the cost-of-living crisis hitting consumer confidence had created a “perfect storm” for many firms.

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Ms Nicholls warned: “Undoubtedly we will see more business failures in quarter one and we very much hope we will see an announcement from the Government on energy pricing and energy support that will maintain some viability for those businesses going through and those losses will not be as significant”.

Her plea to the Government comes amid reports that financial support for businesses could be halved by the time the current package expires in March.

According to The Times, the Chancellor Jeremy Hunt will announce a 12-month extension to the cap on wholesale energy prices – but with support slashed.

It suggests the new scheme lasting 12 months could cost around £20billion – compared with £40billion under the existing six-month programme.

Earlier this month UK Hospitality, which represents over 700 companies, warned strike action could cost the sector more than £1.5billion.

Asked about the figure, Ms Nicholls said on Friday: “That forecast was going to be for the rail strikes that take us into January as well – the ones that are coming up next week.

“Actually what we saw was that the hit in December was more significant than we were anticipating in terms of a slowdown in consumer footfall on the high street during that whole week and therefore the £1.5billion loss of revenue came in December for the hospitality sector”.

Her remarks come as members of the Rail, Maritime and Transport Workers (RMT) union prepare further strike action in the first week of January.

Unless a deal is reached between ministers and union leaders, industrial action on the railways will take place on January 3, 4, 6 and 7.

Before Christmas, the union accused the Transport Secretary Mark Harper and ministers of blocking any deal being reached and averting strike action.