Hospitality is being hit from all directions

Since the start of the year we have seen some mixed reports as to the state of the economy. We were cheered by the news that the economy grew in November, due in part to supporters packing out bars and clubs to watch the World Cup, and we started to think (and hope) that we would be proved wrong with our downbeat view on what this year holds.

However, this latest base rate rise will cause more pain for both businesses and families although the Bank has softened their wording, suggesting that we may be nearing the point when rates peak. The futures market now expects rates to peak at 4.25% but then rate cuts will start to happen towards the end of this year.

Energy prices are still falling which reduces the inflationary pressure,  although this latest cold snap may put a halt to the fall in the short term. However, we then read that the British Beer & Pub Association are calling for an investigation into the way energy companies are treating hospitality businesses. They state that some businesses are seeing a huge price hike, harsh new T&Cs being imposed including 100% increase in the daily hire charge without any notice; demands for up-front security deposits and some energy companies refusing to supply hospitality businesses. For some this is the final straw and some pubs will close as a result.

We feel for those in hospitality who seem to have been hit from every direction since Covid and now are still being challenged. It is devastating that, according to research from CAMRA, in the second half of last year 21 pubs a week closed or lost their licences and we can’t see this improving in the next six months.

Sadly, high street retail doesn’t appear to be fairing much better, with one report we read stating that continued working from home, probably due in part to ongoing rail strikes, means that weekday high-street footfall is still 18% below pre-Covid levels.

So although we desperately want to see a recovery there is still quite obviously a long way to go.

As we have said many times before – and will continue to say - we urge company directors worrying about their finances to seek professional advice.

If you are involved with, or know of any business or individuals that are struggling financially we suggest that you talk to us.

The directors of SKSi look at a formal insolvency process as the last resort – not the first. It is their long held belief – borne out with proven experience – that seeking advice at the first sign of financial pressures will lead to a more favourable outcome. Conversely, doing nothing and hoping the problem will go away is far more likely to lead to a c all form the bank and an insolvency process.

We are always available for an initial zero cost assessment which can be arranged by contacting us.