Hows Trump’s war in Iran is hitting hospitality
The hospitality sector has already been hammered by taxes, regulation and minimum wage hikes. Now Trump’s war in Iran is hitting everyone’s discretionary spending, says Sacha Lord
I’ve written so much about how Hospitality, not just in London, but across the whole of the UK is suffering right now. I’ve been scathing towards the Chancellor, Rachael Reeves, for hitting us first with the National Insurance increase, then the Business Rates increase – which is nothing more than a stealth tax. This kicked in at the same time as the minimum wage increase. Don’t get me wrong, I fully support people getting better pay, but the timing could have been better. It hadn’t been thought through.
As the fifth biggest sector and the third largest employer in the UK, Hospitality is suffering more now that it was during Covid.
As if things weren’t already bad enough, Hospitality now has a new enemy. The enemy sits across the pond: Donald Trump.
I’ve never been a fan of the President. I find him a rude misogynist, who is essentially a playground bully. We’ve seen him try to intimidate Sadiq Khan, The Mayor of London (with The Mayor delightfully holding his own).
The world is now suffering because of Trump’s War. That’s what it is; it’s his war. He pressed the button and his plan (or lack of) has spectacularly backfired. Whatever way you look at it, not only is Trump losing, but over the last few weeks, he’s alienated the whole of Europe, NATO and even managed to upset The Pope. It’s unheard of.
But how does Trump’s War affect the already struggling London and UK Hospitality scene? It’s worse than you could possibly imagine.
Pubs, restaurants, hotels and other venues all depend on discretionary spending. We’re already seeing people delaying big purchases because of the war. Hospitality is flagged as one of the most exposed sectors to falling disposable income.
Tourism is going to be hit, especially from regions directly impacted by the conflict. We’re going to see more travel disruption and higher flight costs.
There is a positive to this though, in that we might see a surge in staycations. With overseas travel spending falling, we could possibly see an uptake in UK hotel demand.
It’s the sharp rise in costs that concerns me the most. Even before Trump’s War, after all costs, the average profit on a pint was only 13 pence.
We are now going to see a surge in energy costs, including cooking, heating and refrigeration.
We’re already at a stage where operators can’t increase the prices as customers simply won’t pay them. We’re stuck between a rock and a hard place, with sadly many more closures around the corner.
The future looks dire
With the war now looking like it’s going to drag on, due to Trump’s failure to initiate a successful ceasefire, the future looks dire.
The IMF has already confirmed that the UK faces the biggest economic shock in the G7.
It’s also suggested that the global economy could be in risk of recession.
As it stands, even now the UK forecast has been downgraded sharply, as we face a stagflation shock, meaning low growth and high inflation.
In a nutshell, consumers have less money and businesses have higher costs.
It’s a completely untenable situation for the sector. Normally, when independents are closing, we see the big corporates hovering like vultures, ready to pounce and make our high streets even more sterile; but even they aren’t investing and I don’t blame them. Who in the right mind would invest into a sector that’s still battered and bruised from Covid.
I have been extremely critical of both Starmer and Reeves. I’ve met Starmer a few times and he’s genuinely a nice person, who means well, but he isn’t the right leader for the economy. Reeves told me she was The Chancellor of “business and growth;” yet it seems to me that she is quite anti-business.
Reeves told me she was The Chancellor of “business and growth;” yet it seems to me that she is quite anti-business
The local elections will be a blood bath for Labour, I just hope Labour MP’s decide it’s time to give someone else a chance.
As for Trump, the man who depicted himself as Jesus, what can I say? I’m lost for words. I honestly don’t think he’s mentally stable.
He’s torn apart our “special relationship” and it’s heartbreaking to watch.
All I can ask if you are reading this, is please support your local independents, your local pub, your local restaurant.
I know you have less money in your pocket, but if you have a few quid spare, that pint means more to the landlord than you can imagine.
Sacha Lord is founder of The Warehouse Project/Parklife, former night time economy adviser to the Mayor of Manchester, chair of NTIA and author of Tales From the Dancefloor