Concern over impact of cost-of-living crisis and staff shortages on hospitality and leisure firms

The hospitality and leisure sector’s post-pandemic recovery could be massively restricted by the cost-of-living crisis and a widespread lack of staff, a new report is warning today.

Barclays Corporate Banking has revealed findings from its UK Hospitality’s Next Challenge report, showing that more than three quarters of relevant operators are confident of growth this year, predicting an average 30.5 per cent uplift in revenue compared with pre-pandemic levels. This equates to a £36 billion rise in annual turnover over 2019, and a £54bn increase on 2021, the lender added.

However, businesses also reported that their transport costs had seen a year-on-year jump of more than 38 per cent on average, and their utility bills by 37 per cent, while 94 per cent of firms in the sector are struggling to fill the ranks. Almost a fifth of bars and restaurants have been finding it difficult to hire waiting staff, for example, while 16 per cent of operators overall are having trouble filling senior roles.

In response, new incentives are being offered, with permanent flexible working arrangements (23 per cent) the most popular measure, followed by an increase in staff welfare budgets and the introduction of bonuses (both 22 per cent), Barclays added.

Almost one in five employers have also increased wages given to staff, and kitchen staff will receive a 6.9 per cent rise on average, equivalent to a salary bump of £1,196 for a full-timer, for example.

Barclays added that a “striking” finding of the research is the industry’s plans to offer employment to Ukrainian refugees. In Scotland, 86 per cent plan to do so.

Mike Saul, head of hospitality and leisure at Barclays Corporate Banking, said the hospitality and leisure industry was able to really rebound from the pandemic in the early part of 2022, enjoying robust sales.

The survey found that 94 per cent of hospitality and leisure businesses are struggling to recruit personnel. Picture: Rob Pinney/Getty Images.

“The worsening cost-of-living crisis is now a serious threat to that growth, with the latest Barclaycard Consumer Spending Index showing that restaurants, bars, pubs and clubs have all seen a slight decline in May 2022, compared to the month before,” he stated.

“Crucially for the industry, our research shows that talent shortages are also a major concern... It means there is now an added imperative for hospitality and leisure firms to find new and novel ways to recruit, reward and retain their staff.”