Hospitality and leisure businesses are among the most vulnerable to rising energy costs. A new survey commissioned by eEnergy shows that nearly 25% of these businesses think they might have to close in the next 12 months. The survey also found that three quarters of respondents are considering reducing opening hours or making redundancies in an attempt to cut energy use and therefore charges.
Restaurants and other hospitality businesses are not protected by the domestic user price cap, so there is no upper limit on what energy prices could rise to for commercial users. With energy costs already on the rise, many businesses are facing an uncertain future. The government must take action to protect these businesses and their employees, or risk seeing a major part of the economy crumble.
The cost of electricity and gas is currently capped for consumers at 28.11p per kWh and 20.46p per kWh respectively, with daily standing charges of 50.27p and 29.25p. However, businesses are currently paying an average of 46-57p per kWh for electricity and 19p per kWh for gas, with daily standing charges of up to 107.6p and 169p respectively.
From October, the cost of electricity is set to increase by 200%, which would mean businesses would be paying £3,000 or more per month for the same supply and usage. This significant increase is likely to have a negative impact on businesses, as well as on consumers who are already struggling with high energy prices. The government needs to take action to ensure that businesses and consumers are not unduly burdened by these increases.
In a recent survey, 25% of respondents said that inadequate energy efficiency measures are costing businesses up to a fifth of their energy each year. Against this backdrop, three quarters of respondents in the hospitality and leisure sector said they still have plans to reach net zero emissions. With almost half of those surveyed considering installing solar panels, it is clear that there is a growing awareness of the need to address the high costs of energy and the climate crisis.
However, more support is needed from the government and other bodies if these plans are to be realised. Without this support, businesses will continue to lose out on valuable energy resources. In the meantime, solar panels and other energy efficiency measures can help to bridge the gap and ensure that businesses are able to meet their long-term goals.
Harvey Sinclair, chief executive of eEnergy, said: “The hospitality and leisure sector has been played a terrible hand over the past two years.
“Sky-high energy prices have heaped pressure on businesses still reeling from Covid.
“With many business owners considering redundancies or even closure, solutions are needed now, but we do not need to wait for government intervention.
“Government grants to finance energy saving solutions only have a 5 to 10% conversion rate and for most it takes 6 to 12 months to get a decision, causing further delays and burning more cash – and carbon.
“We believe the answer is simple: cutting energy waste and carbon should be as accessible as any subscription service, without upfront costs.
“Our survey shows UK businesses appreciate the scale of the challenge faced.”
The hospitality industry in the UK has been under immense pressure in recent years, with insolvencies rising by 64% year-on-year. The sector was already struggling before the pandemic hit, and Covid-19 has only made things worse, with many businesses finding trading conditions even more challenging than during the lockdown. Rising inflation, staffing shortages, high labour costs and reduced consumer spending have forced various industry representative bodies to write a joint public letter appealing for support and help.
UK Hospitality and the British Beer and Pub Association (BBPA) are just two of the organisations that have called on the government to provide more assistance to the hospitality sector. With so many businesses on the brink of collapse, it is clear that action is needed to prevent an industry-wide meltdown. Let’s hope that the government listens to the pleas of those who know the sector best and provides the support that is so desperately needed.
Emma McClarkin, Chief Executive of the BBPA, said that the stasis of party politics right now could not be allowed to stifle the urgent delivery of action on energy.
She said: “The situation is dire and what (our members) are experiencing now is arguably worse than the pandemic because we are receiving absolutely no relief on out-of-control energy costs.”
The cost of living crisis is a major issue that is affecting businesses all over the country. Many businesses are struggling to keep up with the rising costs of living, and this is having a negative impact on their bottom line. However, there are things that businesses can do to mitigate the effects of the cost of living crisis.
Our company offers a free initial consultation to any business owner or director who wants to protect their business and their staff. We will work with you to assess your company’s needs and develop a plan that will help you to preserve your business and preserve your staff. Get in touch with an expert today to learn more about how we can help you during this difficult time.