Optimism in the hospitality sector is rising despite challenging cost dynamics and looming rate uncertainties. According to the latest insights from the Business Confidence Survey conducted by CGA in partnership with NIQ and Fourth, industry leaders are displaying growing confidence, marking the fourth consecutive quarter of positive sentiment.
In this survey, a notable 49% of hospitality leaders express confidence in the sector's outlook for the next 12 months, a substantial jump of four percentage points since August, when it stood at 45%. Encouragingly, the proportion of leaders who remain optimistic about the prospects of their individual businesses remains steady at a reassuring 62%.
The survey brings to light significant improvements for businesses grappling with the repercussions of the pandemic and soaring costs. The percentage of leaders who believe their businesses are at risk of failure has dwindled from 11% in the last quarter to a mere 5% now. Furthermore, the number of leaders with a pessimistic view of the market has dropped from 31% in August to 18% in October.
"These figures are yet another vote of confidence in the resilience of the hospitality industry and suggest that trading conditions may finally start to ease as inflation begins to subside," comments Karl Chessell, Director of Hospitality Operators and Food, EMEA at CGA by NIQ.
Looking ahead, industry leaders are quietly optimistic as they approach the crucial final quarter of the year. A significant 58% express positivity regarding their businesses' Christmas trading prospects, with just 8% feeling pessimistic. In a promising trend, 29% of leaders report that Christmas bookings are ahead of the same period last year, doubling the number (15%) who claim reservations are down.
However, the survey does highlight widespread concerns about the escalating cost pressures. Foremost among these is the issue of business rates, with a staggering 57% of leaders expressing significant concerns ahead of possible changes expected in the Chancellor's Autumn Statement, set to be announced later today (22 November).
There is an overwhelming consensus in favour of rate reform and relief, with 67% of leaders stating that their businesses would become less stable if such relief were to be removed. A substantial number believe that the removal of relief would force them to make difficult decisions, such as cutting investment (71%), reducing staffing levels (61%), raising menu prices (61%), or even closing down sites (45%).
In addition to business rates, approximately a third of leaders express significant concerns about energy prices (35%) and the inflationary pressures on food and drink (30%).
Karl Chessell emphasises, "It's heartening to witness such optimism about Christmas sales, which can truly make or break the year for many restaurant, pub, and bar groups. Despite the financial constraints faced by consumers, their enthusiasm for the unique experiences that hospitality offers remains undiminished."
However, he also sounds a note of caution, "The sector isn't out of the woods just yet. Costs related to food, drink, labour, and energy are still at exceptionally high levels, and as the Autumn Statement approaches, there's genuine apprehension about the potential repercussions of an increase in business rates. Hospitality, a vibrant industry that contributes significantly to the UK economy, is at risk, and any changes to rate relief and caps could jeopardise investment, job creation, and further exacerbate inflation."
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