Extra costs holding back hospitality sector, says Whitbread CEO: The chief executive of Whitbread has warned about the growing number of government interventions putting pressure on the hospitality industry as MPs call for tighter employment regulations. Dominic Paul said that hotels, restaurants and bars were being held back by higher labour costs and faced additional burdens from possible surcharges on overnight accommodation. Writing in The Times, he said the hospitality industry “finds itself on the receiving end of a series of government interventions which together will significantly hold back our ability to contribute to growth”. Whitbread is one of the largest hospitality operators in the country as the owner of ten brands including Premier Inn hotels and Beefeater restaurants, employing more than 35,000 people. Paul warned that changes to thresholds for national insurance would have a disproportionate impact on the cost of bringing in part-time workers and people earning the national minimum wage, and that “pushing up the cost of labour can’t be good for future employment”. He said: “The hospitality sector is an asset the country can be proud of. The industry contributes more than £90bn annually to the economy, generates more than £50bn of tax and employs at least 3.5 million people. The sector is also an unrivalled engine of social mobility. For many people, working in a hotel, restaurant or pub is their first introduction to the workplace, or a way back into it for those who’ve taken time out to have a family or study. Hospitality’s presence across the UK makes it accessible, touching all corners of the country and creating employment in communities where other opportunities are often limited. Whitbread operates over 850 hotels and hundreds of restaurants from Penzance to Thurso, and we employ more than 35,000 people. We think we are a force for good in the places we operate – we’re especially proud of our Thrive programme to help young people with learning and physical disabilities get training to prepare for employment through mini-Premier Inn hotels in special educational needs colleges. As the government doubles down on growth, hospitality can play an important role. It’s something we at Whitbread wholeheartedly support. We have already committed to investing £2b in the UK over the next five years, opening an additional 13,000 rooms by the end of 2030.” He continued: “However, our industry finds itself on the receiving end of a series of government interventions which together will significantly hold back our ability to contribute to growth. UKHospitality estimates the budget will cost the industry £3bn in additional employment costs. In a competitive industry, this will lead to investments being cancelled or postponed. There is also a risk of unintended consequences. The change in the thresholds for national insurance disproportionately affects the costs of employing people part-time and on the national living wage. Pushing up the cost of labour can’t be good for future employment. This has the potential to be exacerbated by some of the government’s proposed workers’ rights reforms. It’s absolutely right that employees are protected so that rogue employment practices are stamped out. But flexibility is key, not just for businesses like ours, but also for many of the people who work for us, who fit their work around other commitments like studying or caring for others. On top of these changes, we have seen speculation that the government may be considering an additional tax specifically on hotel stays. Guests at hotels in the UK already pay 20% VAT, significantly more than other markets, and an additional tax would both reduce the appeal of the UK to overseas visitors and deter Britons from taking staycations.” Paul added: “Whitbread has been around for more than 280 years and we have proven our ability to navigate whatever challenges are thrown at us. But most companies in the hospitality sector are small, often family-owned concerns. We are already seeing the exit of more independent hotels since the pandemic, even though demand for budget rooms is increasing. If the government is committed to growth, it should look to unleash the potential of the hospitality industry. Action on planning and business rates could unlock more development and regeneration, much of it in parts of the country which need it most. Budget hotels like Premier Inn play a key role in breathing new life into communities where many shops and offices are vacant, and into seaside towns in need of high-quality accommodation to help tempt back visitors and drive local commerce. I’m immensely proud, not just of what we achieve at Whitbread, but also the contribution made by our industry as a whole. My message to government is please don’t risk undermining the role that the hospitality sector can play in turbocharging growth. Working together, we can make sure that growth can be felt in every part of the country.” Whitbread features in the Propel Turnover & Profits Blue Book, which is available exclusively to Premium Club subscribers and features 1,066 companies. Its turnover of £2,959,900,000 for the year ending 29 February 2024 is the second highest in the database. 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