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The chief executive of UK supplier Johnson Service Group has called for an increase in the country’s energy price cap, as rising fuel costs threaten to derail the recovery of the beleaguered hospitality sector.
Hotels and restaurants in the UK have been hit by two headwinds in a row: the spread of Covid-19 and rising energy costs due to the war in Ukraine.
Johnson Service Group, a London-listed supplier of workwear and linen to hoteliers and restaurateurs, also felt the impact.
Chief executive Peter Egan noted signs of recovery, but urged the government to tackle concerns about rising costs and a tight labor market.
“Coming out of the lockdown — although there have been a lot of stops and starts . . . hospitality is recovering, not just for us, but for the industry as a whole,” Egan said.
“I don’t think anyone has come back to 2019 levels yet [but] We are seeing recovery in restaurants, we are seeing recovery in hotels, we are seeing recovery in our business. [and] You can see it on our number.”
The group made a pre-tax profit of £5.1mn in the six months to June, revealed in its latest set of results in September, and posted a loss of £13.9mn in the same period last year.
Trading momentum “remained encouraging” since June and volume in the hotels, restaurants and catering industry rose to 92 percent of normal levels in the six weeks to mid-August.
The group noted “highly volatile” energy costs in the first half of the year. Expenses were “significantly higher” than the corresponding period in 2019, representing 9.3 percent of revenue in the six months to June 30.
Egan welcomed the UK’s energy price cap, which subsidizes fuel prices, but called for more support for the hospitality sector.
“I think it’s helped that there’s been some intervention on energy, I think we’d like to see it extended – at the moment it’s up to March next year – I think the whole hospitality sector would like to see it extended, ” said Egan.
“Energy’s influence now increases and . . . the challenges that pose to ourselves and to consumers are significant. I believe [the] The government needs to see that.”
Meanwhile, a tight labor market continues to cause concern.
“Employment, particularly in parts of the UK, is still challenging and it would be good for the government to focus on that as well,” he said.
“When [we] Coming out of the pandemic, Brexit, Covid and everything else, the UK lost a lot of workers who left the country.
Conditions were “definitely” better than the doldrums of the summer of 2021, but staffing is “still proving to be very challenging” across the sector, Egan added.
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