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Business volume growth but profit fall for hospitality sector

27 | 08 | 13

The hospitality industry has seen its business volumes grow significantly, new research has revealed.

According to the Confederation of British Industry's (CBI) latest quarterly Service Sector Survey, consumer services such as restaurants, bars and hotels have experienced the fastest rise in trade since August 2007. This has lead to increased confidence for company's prospects in the near future.

However, despite this rise in business volumes, the CBI found profitability in the industry has actually fallen by the largest margin since February last year due to price growth failing to materialise.

Overall, profits fell by 15 per cent and a further decrease is expected in the next quarter.

Stephen Gifford, CBI director of economics, commented: "Conditions remain tricky as households grapple with the prolonged squeeze on real incomes and business confidence remains vulnerable to any adverse developments in the global economy. But, all being well, business should continue to pick up through this year and into next."

He added that while consumer services firms have growing confidence for the near future, concerns remain in the long-term and this had led to a scaling back of investment and expansion plans. 

This news will be of interest to commercial catering equipment suppliers, as a lack of investment from hospitality firms may mean there is less demand for new kitchen equipment.

The CBI found the number of consumer services firms expecting to expand their business in the next 12 months has dropped by 14 per cent, while the number of people employed in the sector has fallen by 11 per cent.

Further worrying news for the restaurant industry was revealed earlier this month with the latest figures from the Coffer Peach Business Tracker. It found like-for-like sales in the industry fell by 2.5 per cent in January when compared with the year before. 

The drop was even higher outside of London, where trade fell by 5.4 per cent and the heat wave is believed to been an important factor behind this.ADNFCR-16001031-ID-801629980-ADNFCR

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