Soaring Costs Hit Hospitality Sector Hard

The effects of the employer’s national insurance contribution increase, along with the increase in the National Minimum Wage are hitting the hospitality sector in Northern Ireland hard, according to a recent survey.

The survey has been produced by hospitality industry bodies such as Hospitality Ulster, UK Hospitality, The British Institute of Innkeeping and the British Beer & Pub Association, with the responses from the trade giving a stark warning that changes are needed and soon if we are going to stop many businesses from closing down.

A Quarter Of Businesses Operating At A Loss

The survey reveals that over 25% of hospitality businesses who took part are actually operating at a loss, 20% are only breaking even, and sadly only 6% said they were making a greater profit this year than they were doing at the same stage in 2024. 45% said they had cancelled investment plans and just over 50% said they had reduced their number of staff over the last 12 months.

Cost Of Operating Too Much For Hospitality Sector

Here is what Colin O’Neill, the Chief Executive of Hospitality Ulster, said about the results of the survey in an article on the Business Eye website. He is quoted as saying:

“The results of this survey are further proof to what Hospitality Ulster has been warning of for a long time: that the cost of operating is simply too much for Northern Ireland’s hospitality sector, which will suffer significant damage unless government support lifts the boot off our necks.

“How does the NI Executive expect to deliver their Programme for Government plan to double tourism in the next 10 years without the policies in place to deliver it? Put simply, hospitality accounts for four out of every five jobs in tourism and takes two thirds of the tourism spend. You can’t double tourism whilst you allow the hospitality sector to fail.

“Hospitality is worth £2 billion annually to the Northern Ireland economy; it accounts for 72,000 jobs and is the fourth largest private sector employer. Jobs are being lost, livelihoods under threat, communities set to lose precious assets, and consumers are experiencing price rises when wallets are already feeling the pinch. All of this will cause significant damage to both the local economy and local communities.

“The UK Government and Stormont Executive must act urgently. Our survey tells us that the most urgent issues for operators here are a VAT reduction for hospitality, the reversal of the Employer National Insurance contributions, and the alignment of business/non-domestic rates in devolved nations to match incoming reforms in England. In return for these supports, the hospitality industry can return to investment, job creation, and growth in communities. Without them, these surveys will grow more pessimistic, more jobs will be lost, and the local economy will be further weakened.”

Action is needed from the government bodies, let us hope they listen and show some support for the beleaguered hospitality sector.