Hospitality industry worried about potential delay to energy support package

The UK hospitality industry is facing a potential delay to support from the government’s £150 billion energy package.

Unlike with households, legislation needs to be enacted before it can come into force and because of the Queen’s death and the upcoming party  conference season there is limited time to pass new laws before the price hike kicks in at the start of October.

The Financial Times reported that there had been difficulty in launching the support system for businesses.

“It is not worked through yet,” one government official told the FT. “I don’t know whether it will come in before November. There’s some debate about whether it can be brought forward and happen before then.”

Since the publication of the story a spokesperson for prime minister Liz Truss has said that support may need to be backdated.

“We will confirm further details of the business support scheme next week. The scheme will support businesses with their October energy bills and that includes through backdating if necessary,” they said.

Industry response

Hospitality businesses are desperate for financial support to try and stave off the impact of much higher energy bills. There had been talk of mass closures if no aid was given.

Kate Nicholls, CEO of trade body UKHospitality tweeted her frustration at the potential delay.

“This is because energy plans require legislation - unlike domestic support - and with Parliament going back into recess next week there may be insufficient time to pass it before price hikes take effect from 1 Oct. This is why it seems ludicrous to go ahead with conference recess,” she said.

Tim Wheeldon, managing director at owner and developer Zeal Hotels was similarly frustrated: “The industry has been waiting throughout summer for some support and this latest threat of delay will cause further uncertainty as businesses try to deal with an issue which isn’t their fault. The government has once again missed the opportunity to create and support a sustainable solution.  Guests want to experience and support more sustainable hotels and instigating financially viable sustainable solutions within the hospitality sector is crucial. This is a long-term requirement and is the most pressing issue of our times.”

Energy costs for hotels

Like all businesses in the UK, hotels have been dealing with the increase in energy costs over the last year promoted by Russia’s invasion of Ukraine and the knock-on effect this has had with gas prices.

The below chart from hotel benchmarking firm HotStats shows just how much the price rises have impacted costs.

Lionel Benjamin the co-founder of Ago Hotels said at his budget properties energy costs normally run at between 8% to 12% of total operating costs but had increased to 30% of total costs, “with some energy bills rising by 250% per cent where supply contract renewals have been required.”