The UK hospitality sector faces a cost of doing business crisis: Why efficient facilities management matters more than ever

The UK hospitality industry is facing mounting financial pressure, with businesses dealing with rising operating costs, changing tax policies and growing uncertainty ahead of the Government’s upcoming Budget.

From restaurants and cafés to hotels, pubs and visitor attractions, operators are being forced to look closely at every area of their business to control costs without compromising the customer experience.

For many, this has become a genuine cost of doing business crisis.

Rising costs are putting hospitality businesses under pressure

UKHospitality has warned that the sector is facing a disproportionate tax burden, with rising employment costs, business rates and other operating expenses putting pressure on already-tight margins.

According to a recent industry survey, almost a quarter of hospitality businesses were operating at a loss, while 16% said they were at risk of failure within the following 12 months.

The upcoming Budget on 28 October is therefore being closely watched by the industry.

UKHospitality is calling for several measures, including a reduction in hospitality VAT to 10%, changes to business rates and reductions in employer National Insurance costs.

The pressure isn't limited to taxation, either.

Business rates remain a major concern

The 2026 business rates revaluation has significantly changed the landscape for hospitality businesses.

While lower Retail, Hospitality and Leisure multipliers have been introduced for some properties, higher rateable values can offset those savings. Larger properties with a rateable value above £500,000 are also subject to a higher multiplier.

For hospitality operators already dealing with higher staffing, food, energy and maintenance costs, additional property costs can make it increasingly difficult to protect margins.

This is why operational efficiency matters more than ever.

The debate around the 'holiday tax'

Another major battleground is the proposed visitor levy, which has attracted strong opposition from hospitality representatives.

UKHospitality has warned that additional taxation on visitors could increase the cost of holidays, reduce demand and put jobs and investment at risk. Its recent campaign has highlighted concerns that proposed tourism taxes could ultimately make UK destinations less competitive.

For hotels, restaurants and other hospitality businesses, the concern is simple: when the cost of visiting increases, customers may spend less or choose alternative destinations.

Regulatory uncertainty adds another challenge

Hospitality businesses are also having to navigate changes to employment and tipping legislation.

The Government withdrew a revised statutory code of practice on fair and transparent tipping in July, shortly before its planned implementation. A new consultation was subsequently launched in August, leaving businesses waiting for greater clarity around the proposed changes.

For operators, uncertainty itself has a cost. Businesses need to plan staffing, budgets, maintenance and investment well in advance, and constantly changing requirements make that harder.

Where facilities management can make a difference

While hospitality businesses cannot control Government policy, they can take greater control over how efficiently their properties operate.

Facilities management is an important part of that equation. 

A well-managed site can help identify maintenance issues before they become expensive problems, improve the efficiency of building systems, support compliance and ensure that restaurants, hotels and other venues remain safe, functional and welcoming.

When margins are under pressure, reactive maintenance and unexpected breakdowns can be particularly costly.

A proactive approach can help hospitality businesses:

• Reduce avoidable maintenance costs

• Minimise disruption and downtime

• Keep essential building systems operating efficiently

• Maintain safe and compliant premises

• Protect the customer experience

• Manage multiple locations more effectively

The goal isn't simply to fix problems when they occur. It's to prevent problems where possible and make every pound spent on a property work harder.

Supporting hospitality businesses through challenging times

At AGS Group, we understand that hospitality businesses need their sites to operate reliably, efficiently and with as little disruption as possible.

We provide facilities management support for leading hospitality and restaurant brands, helping businesses manage the day-to-day demands of their properties so they can focus on what matters most: their customers, their people and their operations.

From planned and reactive maintenance to broader facilities management requirements, our role is to help keep hospitality environments safe, functional and running smoothly.

In a sector where every cost matters, effective facilities management isn't simply an operational expense. It can be an important part of protecting efficiency, reducing disruption and supporting long-term business resilience.

As the hospitality industry waits for the Government’s next moves, businesses will continue looking for ways to control the costs they can control.

The right facilities management strategy is one place to start.

Find out how AGS Group can support your hospitality business at agsgroupuk.org.