Hotels 'consider closing for winter' as energy bills rise

22 August 2022 by
Hotels 'consider closing for winter' as energy bills rise

Spiralling energy costs have left rural hoteliers contemplating whether to shutter their businesses through the cold winter months.

Russell Imrie, managing director of the Best Western Plus Keavil House Hotel in Crossford, Scotland, said he knew of small hospitality businesses in rural areas who were "seriously considering" whether it was worthwhile to open beyond the tourist season.

Many operators had found their energy contracts were being renewed at three or four times the original price, Imrie said.

He told The Caterer: "It's not uncommon for a business paying £50,000 per year [for energy] to have a renewed contract paying £200,000 a year…and there is no indication prices are going to get any lower in the autumn.

"From November onwards small hotels, and this will probably apply to restaurants as well, are deciding that, because of the cost and high usage of energy as we go into the winter, it would be more financially beneficial for them to close and reopen next spring.

"Many hotels that stay open all year will at best end up at break even or find the cost of energy so high that they operate at a loss.

"It is almost a crisis that is deeper than Covid…there will be more [business] casualties as a result of [the energy crisis]."

Ollie Vaulkhard, owner of Vaulkhard Leisure, which runs 21 hospitality venues around the Newcastle area, said energy bills across his company would more than double from 1 September.

He told The Caterer the business could deal with it by "maybe putting 20p on the cost of a drink" or finding other ways to recoup costs but said operators needed indication of how long the crisis could last.

"I'm not a big believer in government funding our way out of problems but there needs to be a long-term strategy and leadership to give businesses and consumers some confidence," said Vaulkhard.

"If this is going to [last for] 10 years, we can look at borrowing money to do green things within the business."

Last week, trade bodies UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, Music Venue Trust and Night-Time Industries Association called on the government to take urgent action on soaring energy costs in a joint letter.

The Sun has reported that Treasury officials are looking at proposals to give businesses financial aid and discussions have taken place over reducing VAT on energy and fuel duty.

Writing in the Mail on Sunday, business secretary Kwasi Kwarteng said "help is coming" on energy bills but did not specify details. It is unlikely any new policy will be announced before the next Conservative leader and UK prime minister is announced on 5 September.

Martin Mctague, national chair of the Federation of Small Businesses, said: "There are levers the government can pull - energy bill support for small firms to match that given to households, a reduction in VAT on energy, a cut in fuel duty.

"Cost pressures more widely could be eased through a reversal in the recent national insurance hike and taking more small firms out of business rates. The government needs to grasp hold of these levers and start pulling them now."

The Treasury has been contacted for comment.

Image: Kittyfly / Shutterstock

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