Hospitality throws last hurrah ahead of new immigration plans

For most businesses, the festive season is about letting loose and preparing for the holidays. But for the hospitality sector, the next few weeks is about making hay while the sun shines, as firms brace for the impact that new immigration plans will have on hiring.

According to research conducted by premium tonics and mixer brand, Double Dutch, Brits are planning to spend up to £200 on their festive outings this December to bring a £7.4 billion spending boost to hospitality firms this year.

The increased spend will provide a welcome boost to the industry, which has been dragged down this year by a cost of living crisis that has lessened consumer appetites for going out.

However, celebrations have been cut short by the plans to lower levels of legal migration into the country, which industry leaders are warning will worsen labour shortages already being felt throughout the sector.

Braced for the storm

Earlier this week, the Home Secretary James Cleverly unveiled a not-so-welcome early Christmas present for hospitality business owners: the promise to cut down on immigration.

Under the new rules, the earning threshold for a skilled worker visa will rise to £38,700. This represents an increase of almost 50%, and is far above the average weekly earnings for a hospitality worker in September 2023 (£305).

Exceptions have been made for the social care sector, where the talent gap is similarly ferocious. However, no concession has yet been made for hospitality.

Set to come into force in Spring, the new changes will have a disastrous impact on the sector, where firms have come to rely upon overseas workers to plug gaps in labour supply.

Hospitality pessimism

Festive spirit may not be enough to help SMEs weather the incoming storm next year. Office for National Statistics data indicates significant shortages remain across the UK’s hotels, restaurants and pubs. 132,000 vacancies are currently open, a figure that is 48% above pre-pandemic levels.

In a recent Startups’ survey of 500 UK small businesses, we uncovered that hospitality displayed the most pessimism of any sector for 2024. 20% of companies in this industry feel negatively about the year ahead, no doubt due in part to the issues around talent scarcity.

UKHospitality chief executive Kate Nicholls estimated that 95% of the 8,500 hospitality visas issued last year would no longer be eligible under the new government plans, worsening feelings of pessimism throughout the sector.

AI waiters could spell way out

One potential silver lining amongst hospitality firms could be the rapid rollout of AI technology, which has already revolutionised many sectors including HR and finance.

Worker shortages are one reason to celebrate AI’s rapid expansion. Experts have already suggested that AI tools, such as virtual assistants, be used to fill hiring gaps and speed up output. Large hospitality employers such as Starbucks and McDonalds have already introduced automation tools to great effect.

While robot waiters might not be receiving an invite to office Christmas parties just yet, the rapid advancement of AI means UK SMEs could share access to similar benefits soon.