Wars, recessions, and outbreaks—No matter the hardship that arrives at hospitality’s door, its foundations remain stable and sturdy. Despite enduring significant challenges in recent years, the sector has shown impressive resilience and continues to grow at a rate of 5.9%, almost double that of the UK economy.1

However, with the recent publication of UKHospitality’s three-point plan for the sector to thrive, the Home Department’s New Plan for Immigration, and uncertainty surrounding Chancellor Jeremy Hunt’s economic plans, the hospitality industry finds itself at a crossroads.

While acknowledging the positive steps taken to alleviate industry pressures, major reforms are still needed to address issues such as insufficient investment and labour shortages. Only with active change can a long-term future of prosperity be ensured for one of the UK’s most important sectors.

Giving hospitality the means to thrive

With recent reports indicating over a third of UK hospitality business struggled to make ends meet in Q4 of 2023, the extension of the 75% business rate discount in November was a temporary but welcome reprieve. That said, the Government must now consider long-term reforms to ensure sustained success for the sector.

A good place to start is addressing the business rates multiplier, currently at a restrictive 51%. With a further 6.4% rise expected, hospitality must begin counting the pennies to cover an anticipated £150m bill.2 A reduction in the Spring Budget, or a temporary freeze in the immediacy, would provide relief to businesses already grappling with increased costs.

Additionally, to support businesses and remove the barriers to growth, the Government must reduce the burden of property tax in the UK, currently at 4% of GDP and the highest in the OECD economies. Those in charge should also consider lowering the VAT rate for the sector—a measure that provided vital sustenance to businesses during the pandemic—even if only temporarily. Such reform will provide a means to navigate rising prices and invest in improvements without expecting consumers to pick up the tab, an unfair measure already taken by 72% of hospitality businesses.3

Avoid further depleting the talent pool

Labour shortages, now 48% higher than pre-COVID levels, have plunged hospitality into a serious crisis.4 Home Secretary James Cleverly’s five-point immigration plan will only exacerbate this situation, considering that 58% of UK hospitality workers are from overseas.5 At Burgh Island, we know how important access to global talent is, given workers from abroad shore up our Guest Relations, Events, and Housekeeping teams. Without them, operations on our private island would ground to a halt.

Critically, the proposal would prohibit employers from paying workers 20% less for jobs on the shortage occupation list, which enables easier recruitment of foreign workers during times of domestic shortage. Reducing the number of hospitality visas issued by up to 95%, this change would soon cause the talent pool to run dry.

If the Government insists on forcing businesses to close their doors to workers from overseas, it must also reform the restrictive Apprenticeship Levy. By making training schemes more welcoming to those deterred by a mandatory 12-month commitment, businesses will have more opportunities to show potential workers that hospitality is not a CV stop-gap but a lifelong, career-worthy field.

Sustaining a cultural cornerstone

While reforms are crucial for the survival and growth of businesses, there is a broader need to preserve hospitality as a key element of UK culture. As the tenth most visited country in the world, the UK remains among the hotspots for eager travellers.6 With tourism contributing £214bn to the economy, attracting 30 million visitors annually, the UK cannot afford the demise of a sector that provides these guests with a place to rest their weary heads, the very best of British cuisine, and a gateway to the wealth of history our culture-rich isles have to offer.7

But beyond shoring up the sector’s finances, any change should encourage hospitality to build a foundation with long-term strategies at the core. By reforming around the modern-day traveller, such as through sustainability and community-conscious practices or by creating unique personalised experiences, the sector can forge a future fit for all—that won’t require immediate modernisation.

By working in tandem, hospitality and government can not only maintain but strengthen an industry crucial to the UK economy, identity, and culture.

1. https://www.mordorintelligence.com/industry-reports/hospitality-industry-in-the-united-kingdom

2. https://www.thecaterer.com/news/autumn-statement-2023

3. https://www.thecaterer.com/news/business-rates-hospitality-relief-ukhospitality

4. https://www.ukhospitality.org.uk/campaign/workforce/

5. GLA Economics, ‘Changes to UK Immigration Policy’, December 2023

6. https://www.schengenvisainfo.com/travel-guide/top-10-most-visited-european-countries/

7. https://www.condorferries.co.uk/uk-tourism-statistics