A fall in net migration from the EU to 100,000 in 2017 has been described as an "alarming portent of possible disaster" by UKHospitality.
Figures released by the Office of National Statistics (ONS) showed EU immigration had fallen to a four-year low in the first full calendar year since Britain voted to leave the EU.
The ONS reported that the number of EU residents coming to the UK looking for work had fallen by a third, while those arriving to take up a pre-arranged position remained stable. A record 139,000 EU citizens left the UK in the year.
Commenting on the figures UKHospitality chief executive, Kate Nicholls, said: "Yesterday's figures are an alarming portent of possible disaster for the hospitality sector. Although net migration from the EU still stands at 100,000, this represents a significant fall on the previous year. Particularly distressful is news that this squeeze is being felt most acutely in lower-skilled labour which makes up the bulk of the workforce.
"The hospitality labour pool is shrinking and around a quarter of employers in the sector already say they are struggling to fill vacancies. The hospitality sector relies heavily on EU migrants to fill many of its vacancies and should this trend continue, businesses are likely to struggle to keep up with projected growth."
Migration from the Czech Republic, Hungary, Slovakia, Slovenia, Estonia Poland, Lithuania and Latvia has fallen by 36,000 to 6,000 since the referendum while migration from the 14 longer-term EU members fell by almost 50% to 46,000.
Overall migration increased by 33,000 to 282,000, driven by an rise in those arriving from outside the EU.
The government has said it "remains committed" to reducing net migration to the tens of millions.