Energy prices have soared to record highs, with business energy bills forecasted to remain 70% above pre-energy crisis rates in 2021 based on Cornwall Insight analysis. This surge is particularly devastating for hospitality businesses, which already operate on tight margins. Compounding the issue are increased employer National Insurance Contributions, higher minimum wages, and new taxes, all contributing to the financial strain on the sector.
Energy expenses have become a significant burden for hospitality businesses. The British Beer & Pub Association (BBPA) warns that up to one in 50 pubs may face permanent closure this year, citing energy prices as a primary factor. Stonegate Group, the UK’s largest pub chain, plans to increase beer prices by 4% to offset rising costs in energy, wages, and licensing. Similarly, Greene King anticipates an additional £50 million in annual costs due to new tax hikes, further straining the industry.
Many hospitality businesses rely on third-party brokers to secure energy contracts in hopes to secure the best deal. However, some unscrupulous brokers use aggressive sales tactics and embed undisclosed commissions into contracts leading to inflated energy costs for businesses already operating on thin margins.
In response to these challenges, hospitality trade body UKHospitality petitioned the Competition and Markets Authority (CMA) to investigate the energy market, emphasising the entrenched competition problems and the need for formal scrutiny.
Mis-sold business energy contract
Business Energy Claims (BEC) has been instrumental in supporting affected businesses, offering expertise in identifying mis-sold contracts and reclaiming lost funds. BEC’s track record in holding energy brokers accountable provides a lifeline for hospitality firms seeking redress.
Callum Thompson, CEO of Business Energy Claims says: “The majority of the enquiries we’re currently getting through our website are from people in the hospitality industry who have nowhere else to turn. There’s plenty of evidence to suggest that the sector as a whole is being unfairly targeted by unscrupulous third-party intermediaries.”
In response to mounting pressure, Ofgem announced new measures aimed at increasing transparency in the energy market. Starting from October 2024, all non-domestic energy contracts have been required to disclose any broker fees, and suppliers will be required to work only with brokers who are members of a redress scheme, such as the Energy Ombudsman. These reforms are a step in the right direction but, for many businesses, they come too late.
Callum adds: “For hospitality businesses grappling with inflated energy bills and opaque contracts, seeking redress is crucial. Business Energy Claims has a proven track record — working with hospitality businesses — of holding energy brokers accountable and recovering funds for affected businesses. Every penny counts in these challenging times and we are here to help all hospitality businesses concerned about a potentially mis-sold energy contract.”
As the industry navigates this complex landscape, increased awareness and proactive measures are essential. By scrutinising energy contracts, demanding transparency, and holding brokers accountable, hospitality businesses can take steps to mitigate the financial pressures they face and work towards a more sustainable future.