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Business rate changes threaten to call time on more pubs, restaurants and hotels next year, triggering a fresh wave of closures across Wales, an industry chief has warned.

David Chapman, executive director for trade body UKHospitality in Wales, told the Senedd’s economy committee his industry faces “enormous” pressures.

He questioned why hospitality businesses were excluded from the Welsh Government’s plans to cut rates for retail businesses on high streets in town and city centres.

Mr Chapman said: “We’ll end up with us seeing rises in rates from next April worth nearly £7,000 to a pub, £15,000 to a big restaurant and about £50,000 to a hotel. That, on top of all of the other circumstances, will compress and possibly reduce our ability to carry on.”

He added: “We’re going to be cutting back on staff every day, we’re going to be closing for more. Maybe instead of a pub being shut on a Monday then a Tuesday, it’s probably going to be a Wednesday. We’re seeing that some places inevitably will have to close.”

‘Grave’

Giving evidence on September 24, Mr Chapman warned the hospitality industry is going through an “absolutely diabolical economic time” focused on survival, not profitability.

“It’s a grave position without any doubt,” he said.

“On the consideration of readjusting business rates, we pay about three times more than we should because we’re bricks and mortar buildings and not internet businesses, for instance.

“The help that would make a great difference to us immediately in Wales.”

The hospitality representative estimated job losses in the industry in Wales could be greater than the impact of Tata Steel’s decision to cut 2,500 jobs at the steelworks in Port Talbot.

“Some 89,000 jobs in hospitality have gone in the last ten months across the UK,” he said, before adding: “We’ve taken a hit of about seven times more than most other sectors.”

‘Firepower’

Mr Chapman told the committee Welsh food and drink initiatives have only a fraction, “probably a twentieth”, of the financial “firepower” available in Ireland despite Wales having world-class products such as lamb.

He said businesses are supportive of local produce but are often forced to choose cheaper, more readily available alternatives due to tight margins and price-conscious customers.

“The cost side of things has gone mad,” he warned.

“We’ve had national insurance contributions this year. One hotel in north Wales employs 80 people and its NI bill has gone up £2,500 a week since April.”

Mr Chapman used an analogy of a sandwich to describe the pressure on businesses, where the bottom half – representing costs like wages and energy – has grown much bigger than the top half representing customer spending.

“The middle bit of the sandwich would be the profitability,” he said.

“That’s now become virtually non-existent in many businesses and it’s become a way of making a living rather than being able to reinvest in the product.”