Cost of living: Hospitality firms plan to put up prices by 11%

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Prices for restaurant meals and hotel stays look set to rise sharply after the hospitality sector’s industry body said firms were being forced to pass on surging costs.

A survey by UK Hospitality found that prices across the sector were set to increase by an average 11% this year.

That will add to the strain on households already facing across the board cost of living increases from household bills to shop prices as well as a national insurance rise and interest rate hike.

UK Hospitality said that on top of two years of severely-disrupted trading and a Christmas period spoiled by Omicron restrictions, it is facing steep increases in energy (41%), labour (19%), food (17%), drink (14%) and insurance (21%) costs.

Many of the businesses it represents are mired in debt and running out of cash, the organisation said.

It is calling for the government to ease the burden by making permanent its current reduced rate of VAT for the sector, of 12.5%, which is currently due to expire at the end of March and return to 20%.

UK Hospitality surveyed more than 340 businesses representing 8,200 venues employing 190,000 people about their plans to put up prices.

It found 47% said they would be forced to increase them by more than 10% this year, with 15% anticipating hikes of more than 20%.

More than four-fifths of operators also said they had seen moderate or severe levels of cancellations this year, which UK Hospitality suggested consumers were “already feeling the pinch”.