BUSINESS owners in the hospitality industry will have more reason than most for enjoying the current spell of warm sunny weather.

The sight of packed beer gardens and street cafes, and the influx of day-trippers to tourist hotspots during the most recent May bank holiday weekend, will have gladdened the heart of many an operator who has been engulfed by a tsunami of cost increases over the last 12 months.

The unfortunate reality, however, is that there is still no sign of that cost burden easing to any significant extent.

Indeed, a survey published by major trade groups on Monday underlined the difficult outlook that continues to face the industry.

New data collected by research analyst CGA Insight on behalf of the British Institute of Innkeeping, UKHospitality, the British Beer & Pub Association and Hospitality Ulster hammered home how critical the rise in energy costs has become over the past year.

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The survey found just 29 per cent of people running hospitality businesses feel optimistic about the next 12 months, with 86% stating they are concerned or very concerned about energy costs.

The average bill was up 81% on last year and three times higher than in 2021, while those who had no option but to enter long-term fixed rate contracts between July and September 2022, as energy prices rose to a peak, felt the least optimistic about the coming year.

Nearly half (46%) of people running businesses which locked into a contract at the height of the energy crisis said they felt their enterprise was at risk of failure in the next 12 months.

In response to the findings, the industry groups called on the UK Government to intervene to ensure energy suppliers offer to renegotiate with businesses locked into “sky-high” contracts, or at least provide financial support to those most at risk.

The trade bodies said in a joint statement: “The energy crisis has been pushing pubs, bars, and restaurants to breaking point for a year now.

"The Energy Bill Relief Scheme provided a short respite but with that falling away last month businesses are back to paying high costs, with no end in sight for the thousands locked into contracts who will be obligated to pay extortionate rates well into next year.

“Put simply, this data is extremely worrying for thousands of otherwise viable hospitality businesses.”

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Having weathered the prolonged storm of Covid, it seems unfair that the industry is being denied the chance to fully recover by external factors over which it has no control.

In the depths of the pandemic, operators longed for simply being able to open their doors and trade freely again. But months of Covid restrictions were quickly followed by an acute staffing shortage before a savage cost crisis - initially arising from factors such as the economy reopening and Brexit and made worse by Russia's invasion of Ukraine - kicked in.

Of course, it is not just businesses who have been dealing with a huge increase in costs. Consumers in the UK have simultaneously been forced to endure a miserable cost-of-living crisis as inflation surged to a level not seen in around 40 years.

That has been followed by a steady rise in interest rates as the Bank of England has attempted to curb inflation.

The base rate now stands at 4.5 per cent after a quarter-point increase in May, with the successive rises imposed by the Bank since the first half of December 2021 - when the rate was 0.1% - resulting in higher monthly mortgage payments for thousands of homeowners.

The challenge to the hospitality industry from the rise in interest rates was outlined by Stephen Russell, managing director of Glasgow-based beer, wine, and spirit wholesaler Inverarity Morton, in an interview with The Herald on Friday.

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Mr Russell, who was commenting as his company reported its first profit since before the pandemic broke out, said: “If you imagine the amount of money on a monthly basis that that is going to suck out of people’s disposable incomes… If anybody is trying to cut down, one of the easiest things people can do is not go out for a meal.

“They can go to Marks & Spencer, buy a meal and a bottle of wine, stay in, and watch a movie. That’s one of our competitors now. We need people to go out to bars and restaurants and hotels. That is our business.”

The difficulties facing the industry are exacerbated by preparations for new regulations, including the controversial deposit return scheme which may yet be shelved because of friction between the Scottish and UK governments over the Internal Market Act.

Tourist-facing operators will be planning for a new licensing regime for short-term lets and a transient visitor levy, while across the wider tourism and hospitality sector firms are continuing to face a labour and skills shortage which is widely acknowledged to have been worsened by Brexit.

But it is important to recognise the positives. Official figures released on Friday showed that 3.2 million international visitors came to Scotland in 2022 in what VisitScotland hailed as a major boost following the prolonged disruption sparked by Covid.

“The return of international visitors marked a significant milestone in the recovery of Scotland’s valuable tourism and events industry,” said chief executive Malcolm Roughead. “These visitors stay longer and spend more, helping support jobs and communities right across the country.

“It is clear that, despite the challenges of recent years, appetite for Scotland is strong. There is a real desire and demand for our world-class offering, particularly from important markets such as North America. Every region and destination in Scotland stands to benefit from this interest.”

Roy Brett, chef patron of the award-winning Ondine seafood restaurant in Edinburgh, told The Herald that the presence of tourists gives everyone a lift.

“When you hear the different accents, whether it is in the dining room or on the streets, it’s a bit of reassurance that things are going to start to get back to some normality,” he said.

“With everything else that is going on in the world – it is such a changing place right now - everybody wants a normality about life, the seasons, and the tourism.

"Getting that little bit of stability around on the economic side is really important.”