Soaring costs and staff shortages threaten £36bn hospitality growth - report

The hospitality and leisure sector 's post-pandemic recovery could be severely hampered by the cost-of-living crisis and a widespread lack of staff, a new report warns today.

'UK Hospitality 's Next Challenge ', a study from Barclays Corporate Banking, shows that the release of pent-up consumer demand for socialising, holidays and experiences following the pandemic has given a boost to the sector.

Around 77 per cent of operators are confident of growth this year, and had predicted an average 30.5 per cent uplift in revenue compared with pre-pandemic levels.

This equates to a £36bn rise in annual turnover over 2019, and a £54bn increase on 2021.

However, the predicted growth could be stifled by soaring supplier costs and a scramble for talent.

Hospitality and leisure businesses report that their transport costs have already spiked by over 38 per cent year-on-year on average, and their utility bills by 37 per cent.

Meanwhile, 94 per cent of hospitality and leisure businesses are struggling to recruit personnel, with vacancies for cleaning staff (20 per cent), front of house staff (18 per cent), and delivery staff (16 per cent) causing the most issues.

Almost a fifth (16 per cent) of bars and restaurants are finding it difficult to hire waiting staff, and 42 per cent of gyms and leisure centres cannot find fitness instructors.

In response, operators are establishing new incentives to recruit and retain talent.

Permanent flexible working arrangements (23 per cent) are the most popular measure, followed by an increase in staff welfare budgets and the introduction of bonuses (both 22 per cent).

Almost one in five employers (19 per cent) have also increased wages given to staff.

Senior managers are set to receive the biggest boost to their pay packets, with an average increase of 7.7 per cent - equivalent to £2,014 a year for a full-time worker.

Mike Saul (pictured), head of hospitality and leisure at Barclays Corporate Banking, said: “The hospitality and leisure industry was undoubtedly one of the hardest hit by prolonged periods of lockdown during the pandemic. In the early part of 2022 however, in a society free from restrictions, the sector enjoyed strong sales, leaving many confident about their growth prospects.

“The worsening cost-of-living crisis is now a serious threat to that growth, with the latest Barclaycard Consumer Spending Index showing that restaurants, bars, pubs and clubs have all seen a slight decline in May 2022, compared to the month before.

“Crucially for the industry, our research shows that talent shortages are also a major concern, with businesses in every vertical finding it challenging to fill their vacancies. It means there is now an added imperative for hospitality and leisure firms to find new and novel ways to recruit, reward and retain their staff. ”

Another key result from the research shows that almost a quarter (23%) of hospitality and leisure firms are offering more sustainable products and services than they were before the pandemic, and 32 per cent say that an increased focus on sustainability has been their biggest learning from the past two years.

To counter rising costs, 23 per cent of businesses are applying price rises to less sustainable or ethical products.