Vacancies fall while prices rise for hospitality
The rate of overall UK inflation experienced a sharp fall to 6.8% in July – the same month which marked the fourth consecutive reduction in vacancies for hospitality. However, the sector is still facing numerous challenges.
The latest ONS figures reveal that the Consumer Prices Index (CPI) rose to 6.8% last month, suggesting the government is on track to reach its target of lowering the rate to 5.3% by the end of the year (just below half of what it was at its peak of 11.1% in October 2022).
Hospitality vacancies were also down between May and July. This week’s ONS data showed that the number of vacancies in the sector fell to 124,000 during this window, with figures down by 47,000 compared to the same time last year. Accommodation and food service sectors were among those which experienced the “largest falls” in the number of unfilled roles, the ONS said.
Despite these gains, industry watchdogs are still advising caution, particularly when it comes to the spiralling cost of living and doing business, which pushed up hospitality prices to 9.6% in July from 9.5% in June.
“It’s positive that vacancies in hospitality have fallen for the fourth consecutive month,” UKHospitality chief executive Kate Nicholls said. “But it remains the case that levels are still significantly higher than pre-pandemic levels and that average hours worked were down on the previous three months.”
On the topic of overall inflation, she called the fall “encouraging and indicates a positive trend”. Though she also noted “serious concerns that hospitality businesses will be hit hard by an inflation-linked hike in business rates next year”.
“It’s clear the fall in the overall rate has been driven by decreasing energy costs, which suggests further action on energy could result in inflation coming down far more rapidly. Ofgem has set out a number of recommendations to clean up the energy market and these should be implemented as soon as possible.”
Ed Bignold, MD of Corporate Transformation Services for global professional services firm Alvarez & Marsal, said: “Despite a sharp fall in the overall rate of UK inflation, the hotel and restaurant industry experienced a slight increase in prices, rising from 9.5% in June to 9.6% in July, driven largely by yesterday’s news that UK wages grew much more than expected and at a record annual pace in recent months. This is a concerning development for the sector and consumers alike, and indicates that hospitality businesses will continue to feel the squeeze, with wage bills making up a significant proportion of all costs.
“There are however some bright spots for business owners. International travel has become increasingly expensive. As a result, many Brits have opted for staycations this summer, helping to increase demand for the UK’s restaurants, pubs and bars, and keeping hotels at higher occupancy for longer. These benefits should continue to feed through in the coming weeks. However, to fully capitalise on this effect amid the cost-of-living crisis, the industry needs to tread the line between affordability for consumers and sustaining margin.”
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