Unless the Government intervenes to help leisure and hospitality businesses with soaring utility bills, thousands could be forced to close over the next few years.
The stark warning comes from Regency Purchasing Group, one of the UK’s leading procurement businesses, in collaboration with the Association of Indoor Play, which says the indoor play sector is now in the midst of a ‘perfect storm’.
Managing Director Alex Demetriou said: “Until recently, a typical small indoor play centre of approximately 6,500sqft was spending around £18,000 per year on utilities, but businesses renewing their contracts are seeing their annual costs increase to between £45,000 - £60,000.
“That is up to an extra £42,000 a year, on utility bills alone. Many indoor playcentres simply do not make £42,000 profit in a year, so the utility bill crisis alone is the difference between making money and losing it.
In addition, indoor plays that serve food are seeing further challenges with not being able to recruit the staff they need, forcing them to close their kitchens, either for several days a week or, in some cases, closing them entirely.
A number of our members have told us they are now making plans to close their businesses when their utility contracts are up for renewal later in the year.
It’s a bleak picture today with the number of businesses that have closed or are struggling, but the situation is set to worsen further with hundreds of businesses now forward-planning their closures in line with forthcoming utility renewals.
Unless the Government intervenes, I expect hundreds of hospitality businesses to close by the end of this year, and it could be thousands within a few years.”
He said Brexit, which has been somewhat overshadowed by the pandemic, has had a huge impact on the hospitality industry’s ability to recruit the required numbers of staff.
Food and drink costs have increased, there have been supply chain issues and minimum wage has increased, all of which have contributed to the ‘perfect storm’, with many smaller hospitality businesses already operating within very tight margins.
Regency Purchasing Group has been supporting its growing customer portfolio which includes hospitality as well as leisure and indoor play by securing the most competitive pricing for food and drink, but in recent months the procurement experts have found themselves spending more time taking a more holistic view of businesses, including utility costs.
But Mr Demetriou warned that, ultimately, the Government needs to step in to give hospitality businesses any chance of weathering the storm.
He said: “The price cap in the UK is used by OFGEM to protect the consumer, not businesses.
“A lot could be learned from France, where there is a Tarif Shield which protects both private and professional consumers from excessive increases in utility bills.
“The news and media website Vie Publique says this tariff limits increases to 38 Euros per year for private customers and 60 Euros per year for professionals.
“Without these measures, the regulated tariff would have risen by 330 Euros per year for private customers and 540 Euros per year for professionals.
“Our whole country runs on utilities and it’s going to take a collective approach to ease the growing pressures on businesses, but that approach has to start with some significant Government intervention.”
With the UK’s largest network of field-based procurement managers, Regency works with nearly 4,000 businesses throughout the UK, including some of Britain’s biggest and best-known leisure attractions, hundreds of golf clubs, plus pubs, hotels, zoos, farm attractions and many others.
Janice Dunphy, Chair of the Association of Indoor Play and owner of the Web Adventure Park in York added, "mirroring the pandemic, indoor play will again be hit the hardest as there is simply not enough profit to sustain the costs of this energy crisis. Sadly this will directly impact children’s mental health, already fragile from the pandemic, as it will not only put a further wave of indoor play centres out of business. And it will also mean that admission prices will have to rise, making play prohibitive for those who need it the most."
Regency specialises in sourcing products, supplies and services from various markets, locally, regionally, nationally and internationally.
Mr Demetriou also sits on the Executive Committee of the Association of Indoor Play, the trade industry body for any leisure operator offering indoor play in the UK.
14 August 2022
For more information:
Maria Cantarella | Operations Director | Association of Indoor Play
Office Tel. 0203 951 8640
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