Hospitality Industry On The Brink: The Budget 2024

Hospitality industry on the brink – can the Budget intervention and creating business efficiencies help to secure its future?
‍Peter Moore, CEO of Lolly


We need to see stronger support from the new Labour government; the first budget has offered little to drive meaningful change or bolster the UK hospitality sector.


As the sector braces for another tough year, industry leaders urged the Chancellor to address key challenges in the 2024 Budget. With record restaurant closures, escalating operational costs, and a workforce under pressure, the sector is in desperate need of both financial support and innovative solutions to help ensure its long-term survival. In the last quarter of 2023 alone, the UK saw more than 500 restaurant closures - the highest quarterly total on record.

Initial reaction to Labour’s first Budget in 14 years has already demonstrated that many hospitality businesses see that the rise in National Insurance for employers and the increased minimum wage (albeit lower than previous budgets), will add further financial pressure for the industry.


Calls for budget support to offset business rates

The recent Budget offered acritical opportunity for the Government to alleviate some of the sector’s financial strain, especially concerning business rates. Hospitality groups have consistently urged the Government to provide relief in this area. Chancellor Rachel Reeves confirmed that from April 2025, the existing 75% business rates discount will drop to 40%, capped at £110,000 per business, which will significantly raise costs for those currently eligible.

To sustainably support high-street retail, hospitality, and leisure (RHL) sectors, the Government intends to implement permanently lower business rates multipliers for RHL properties starting in 2026-27, balanced by a higher multiplier on high-value properties. This measure aims to offer lasting relief for smaller businesses while maintaining fiscal responsibility.


Legislative challenges add further pressure

Adding to the economic strain are new legislative changes, including tipping regulations and the impending Employee Rights Bill, which places additional pressure on already overstretched operators. While these laws aim to protect employees, they also require businesses to navigate new compliance demands at a time when many feel ill-equipped to handle extra financial burdens.


Innovation to create business efficiencies

The sector also recognises the need to adapt operationally. Technology is emerging as a key area of focus, offering ways for businesses to streamline costs while maintaining service levels.

Innovations in stock management and inventory tracking can help reduce waste and help hospitality providers to manage spending more efficiently. Integrating automation, such as robotic waiting and hotel room services also opens up possibilities for reducing labour costs and tackling the sector's ongoing staffing shortages.

The Budget highlights that tax on non-draught alcoholic drinks was set to increase by the higher RPI measure of inflation, but tax on draught drinks would be cut by 1.7%. Perhaps this reflects a shift in drinking patterns, and this is where technology can be used to support – providing insight into changing consumer behaviours. Helping hospitality providers to properly arm themselves and work towards driving growth.

However, whilst technology can ease certain operational pressures, it requires a level of investment that many businesses may struggle to meet. Support from the Government would help to catalyse this shift, empowering businesses to adopt innovative solutions that could transform the sector's resilience over the long-term.


A sustainable future for hospitality

Financial intervention on business rates, support to navigate legislative changes, and investment in technological solutions would offer the sector a path toward greater stability. At the end of the day, the hospitality industry needs to turn the current challenges into opportunities for sustainable growth and adaptation.

Only through this multi-faceted approach can we ensure that the UK’s hospitality businesses not only survive but thrive in a future that demands resilience, adaptability, and a fresh approach to traditional service models. At the same time, it’s important to recognise that encouraging greater levels of custom will be vital…