Flat revenues drive staff cuts to control costs, reports Index

The latest Moore Kingston Smith Hospitality Sector Index paints a challenging picture for the industry. Despite seasonal factors that typically boost performance, such as bank holidays and favourable weather, revenues have remained flat. This has forced operators to focus on productivity gains and cost control to maintain stability.

Key findings

• The Index stands at 100.8, indicating marginal growth driven by productivity improvements rather than revenue gains.

• Revenues declined by 0.18%, despite seasonal expectations for growth.

• Worked hours fell by 0.99%, reflecting efforts to offset rising employment costs.

  
  

Despite the slight decline in revenue, the sector has managed to stay in positive territory due to a reduction in hours worked. This suggests that businesses are actively managing staffing levels to counteract the impact of April’s increases in employer National Insurance and the National Minimum Wage.

Casual dining, pubs and bars have seen a downturn in revenue, possibly indicating a tightening of consumer discretionary spending.

In contrast, hotels and fine dining experienced modest revenue growth, but this was accompanied by a notable drop in worked hours, over 3% in fine dining, highlighting a continued emphasis on efficiency.

These trends align with recent reports showing that over 100,000 jobs have been lost since the National Insurance hikes took effect, and hospitality sector vacancies have dropped by more than 3,000 in the three months ending May. This month is the final full month before the summer holiday season so is critical for many businesses in the sector.