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Cash crisis looms for hospitality sector

26th February 2024

Businesses in the hospitality sector are facing an increasingly harsh cash crisis as new research reveals many in the sector have no cash or are close to having no cash.

Research carried out by a group of hospitality trade bodies found that a quarter of businesses in the sector had run out of money and a further 29% had cash reserves of less than three months.

The trade bodies, which included UKHospitality and the British Beer & Pub Association, called for urgent support from the government to ensure the sector continued to play an important role in the economy.

Increasing costs

Increasing costs was the main factor creating cash shortages, with rises in energy costs and wages. A further wage rise is due on 1 April 2024 with the already announced increase in the National Minimum Wage.

Inflationary price rises has led to around two-thirds of businesses feeling pessimistic about their future over the next twelve months, according to the research.

Business rates was another issue arising from the research, with demand for a lower business rates multiplier and even business rates reform.

Spring Budget 2024

With the Budget on 6 March, businesses in the sector are asking, among other things, for a lower rate of VAT for hospitality, 

Joint statement

In a joint statement, the trade bodies who carried out the research, said:

“These results clearly show the perilous state our pubs, restaurants, hotels and cafes find themselves in. The fact that a quarter have run out of cash reserves completely is a real cause for concern.

“Those businesses are extremely vulnerable to the slightest shock forcing them to shut their doors for good.

“We’ve already seen too many good businesses shut up shop and that has left cities, towns and villages without a vital community asset where people can meet, host events and share enjoyable experiences."

The trade bodies added that help for the sector will ensure businesses remain afloat, but will also lead to further investment from the sector itself.

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Check out our recent case study where we were able to help Skinner's Brewery in Cornwall with the sale of its business and assets to an unconnected third party.

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