The inflation figures published today by the ONS show that the rate at which prices are rising is slowing. Inflation was 4.6% in the year to October, down from 6.7% in the year to September, with the fall being attributed to cheaper energy prices. The rate of growth in the restaurant and hotel sector is also seeing improvement with Ed Bignold, Head of Travel, Hospitality & Leisure at Alvarez & Marsal, noting that “inflation is finally heading in the right direction in the restaurant and hotel sector, with inflation down to 7.6% in October from 8.6% in September.”
This news has been welcomed by Scotland’s trade bodies, but they are calling for rates relief for the sector in the Autumn statement in Westminster, and the Scottish Budget in December.
Stephen Montgomery, spokesperson for the Scottish Hospitality Group said, “The news of the fall in the inflation rate is welcomed, however this is in the main due to the fall in utility prices.
“This will give little relief to those in our sector who are locked into long term high energy contracts, many of which are more than double in price, or more.
“We now look to the Autumn statement in Westminster, and thereafter to the Scottish Budget in December for what both governments plan to do to help our hospitality sector
“In Scotland we need to see a 75% discount for hospitality in the Non-Domestic Rates for 2024/25. Simply asking for a freeze is not good enough, and our sector deserves and requires better.
“Hospitality is embedded in every small village, town and city across Scotland, and plays an important part in employment, supporting local suppliers, supporting communities, and playing a vital role in the Scottish economy
“Supporting these very hospitality businesses and allowing them to thrive and grow, must be at the heart of the Scottish Budget
“The Scottish Hospitality Group remain fully committed to continuing our working relationship with the Scottish Government to ensure we achieve proper reform in the rates system for hospitality in Scotland.”
UKHospitality Scotland Executive Director Leon Thompson said, “Inflation moving in the right direction is positive for the economy but the lasting impact of record inflation over the past year persists for hospitality businesses.
“Energy costs, in particular, continue to be a significant drag on venues. I’m pleased Gillian Martin, the Energy Minister, has listened to our concerns and made representations today to her counterpart in London about the need for further support for energy-intensive sectors like hospitality.
“The impact of business rates remains one of the biggest concerns for venues across Scotland. Unlike in England and Wales, businesses here have suffered without any rates relief and, in many cases, have seen their rates continue to increase.
“We hope the UK Government takes action on business rates at the Autumn Statement next week but, regardless of the outcome in Westminster, there simply has to be rates support for Scottish businesses this year. Without it, closures will continue and businesses will have no choice but to increase prices for customers – a move that will only fuel inflation.
“The Scottish Government has made much of its reset with businesses and now is the time to prove those credentials and act where it matters most – on business rates.”
Ed Bignold, Head of Travel, Hospitality & Leisure at Alvarez & Marsal, adds, “Falling food prices and stabilising wage growth have helped bring pricing down to more normal levels.
“Despite a period of high prices, consumer appetite seems to have held up. Our recent research shows that nearly half of Brits had increased their holiday budgets compared to before Covid-19, despite having used up most of their excess pandemic savings. Enjoyment of leisure time continues to rank among consumers’ top priorities, and they’re willing to cut back elsewhere to spend in hospitality and leisure venues.
“With base rate rises paused for the moment, and as we enter the festive period, this should be good news for the hospitality industry. Price growth is expected to continue to decline in the coming months, although businesses will need to remain vigilant and flexible when it comes to pricing as higher rates start to impact household budgets.”
