Optimism slowly returning to hospitality following difficult winter

Sixteen percent of hospitality operators in Northern Ireland have stated that they are optimistic about the prospects for the hospitality sector as a whole, marking an increase from January 2024 as the hospitality sector recovers from a difficult winter.

Having stood at 22% in October 2023, optimism fell to 13% in January 2024, with Hospitality Ulster members surveyed in April 2024 attesting to a recovery in optimism since. April 2024 also saw the hospitality sector record lower levels of outright pessimism (54%) than October 2023 (57%) or January 2024 (60%). Those who were neither optimistic or pessimistic about the prospects of the sector stood at 30%. These figures compare with UK-wide figures of 24% optimism, 30% unsure, and 46% pessimism among UK Hospitality members.

The proportion of operators fearing their business is at immediate risk of failure in the next three months has decreased on a quarterly basis from 18% to 6%, although those believing their business is at risk of failure in the next 4-12 months increased from 3% to 11%. The rate of those stating that their business is not at risk of failure decreased from 48% to 45%, while the rate of those who were unsure increased from 33% to 38%.

49% of respondents reported an operating profit in Q1 2024, an overall decrease of 7 percentage points when compared with Q1 2023. Those operating at a loss (17%) also decreased by one percentage point on an annual basis. 28% reported breaking even, a 2 percentage point increase on Q1 2023, while the amount of businesses now deemed unviable was recorded at 6%, a six percentage point increase.

With owners reporting a 12% increase in staffing costs since the National Wage increase in April 2024, the period from January 2024 to April 2024 has seen an increase in owners operating with no cash reserves, from 22% to 24%, and a decrease in those operating with cash reserves worth 1-6 months, from 59% to 46%. However, an emerging trend illustrating a recovery in optimism is the increase in longer-term cash reserves, with 26% of owners now operating with 7-12 months’ worth, an increase from 11% in January.

Colin Neill, Chief Executive, Hospitality Ulster, said: “It is good news that optimism is slowly returning to the hospitality sector. Having endured a tough winter, the sector is beginning to recover a sense of confidence in its own future.

“It is notable that optimism is increasing in Northern Ireland as it decreases in the UK, but it is also the case that the UK’s lowest rate of optimism recorded in April 2024, 24%, is higher than Northern Ireland’s highest rate, 22%, recorded in October 2023. Given the various initiatives around rates relief in Britain, from the blanket 75% hospitality relief to the 100% rural pub relief, it is understandable that optimism is higher in Britain than in Northern Ireland.

“Increased costs of doing business are borne out in the 12% increase in total staffing costs reported since the increase in the National Wage. It is thus unsurprising that our surveys have seen an increase in operators who are unsure about their futures rather than outrightly positive or negative. 93% of our members cited a VAT reduction for hospitality as the most desirable government support to help them tackle these increased costs, with 69% citing full business rates reform; uncertainty will continue to spread unless such supports are delivered. We would urge the Executive to work with industry to deliver upon these supports in order to ensure that this increase in optimism does not dwindle.”

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