The UK hospitality sector is bracing for significant job cuts as rising employment costs and business rates take their toll. A survey conducted by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and Hospitality Ulster indicates that 64% of businesses will reduce their workforce, with 51% cancelling investment plans and 42% cutting trading hours. Alarmingly, 15% of venues may be forced to close.
The survey highlights the impact of energy costs, with 93% of businesses reporting reduced profitability even before recent geopolitical tensions in Iran and the Middle East. Industry leaders are calling for measures such as a VAT reduction for hospitality (89%), permanent business rates reform (74%), and changes to employer National Insurance Contributions (65%) to alleviate the burden.
The trade bodies issued a joint statement: “Hospitality businesses enter April facing billions of pounds in additional costs, forcing many to make heartbreaking decisions. Despite support for pubs on business rates, other establishments face rising bills.”
The increases in National Living Wage and National Minimum Wage alone represent a £1.4 billion annual cost increase for the sector. Business rates are also set to rise significantly, with hotels and restaurants among the hardest hit. For example, the average business rates for a hotel in England will increase by £28,900 in 2026/27, with further hikes expected in subsequent years.
The hospitality sector, a major contributor to the UK economy, is urging the government to collaborate on reducing costs to foster job creation and economic growth
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