James Todd & Co, a respected accountancy group with experts focused on the hospitality sector, has offered some guidance for businesses in the industry, following a tumultuous few months where revenues have fluctuated considerably, and in contrast to the general GDP trends.
The latest UK GDP figures, published by the Office for National Statistics (ONS) provided long-awaited relief reflecting a small margin of growth of 0.2% in March 2025, which compares to 0.5% in February and a contraction of 0.1% in January. While improvements in services spending have played an important role, the firm notes that the levels of apprehension currently present require agility and robust financial planning.
Why Hospitality Sector Businesses Are Struggling With Uncertainties Over the Future
Last year was a significant challenge for many hospitality businesses. Sharp rises in operating costs, high inflation levels, and consumer caution meant that a large proportion of organisations found it challenging to remain profitable.
A reported 42% of consumers indicated last year that they intended to reduce spending on dining out, which increased to 46% for 2025. While interest rates have now stabilised to some extent, the 8.5% increase in staffing overheads introduced in the Autumn Budget has painted an uneasy picture for the months ahead.
Given the sector's dependency on discretionary spending, record-high utility prices and dips in consumer confidence have had a greater direct impact on the hospitality sector than in many other areas. This culminated in a 2.4% fall in trade in January, far underperforming against overall GDP, which shrank by 0.1%.
Although the most recent data shows a more positive outlook, with modest GDP growth largely attributed to services industries, concerns remain. These are particularly relevant following a year when like-for-like sales only occasionally reached above inflation levels and when thousands of hospitality companies closed their doors in just the last quarter—a closure rate of eight businesses or venues a day.
In this climate, James Todd & Co has advised that in-built contingency planning, accurate short and long-term forecasting, and continual oversight of cost pressures, profitability, and reserves are crucial. This gives hospitality sector clients the flexibility to adapt and respond to changes while focusing on commercial sustainability.
Targeted Guidance for Hospitality Business Owners in 2025
Michelle Buzzard, FCA, Partner at James Todd & Co said, ‘There’s no doubt that it’s been a tough couple of years for most hospitality businesses, and we’ve seen particular difficulties within economy-focused providers, as opposed to luxury services, who have been hit hardest by drops in consumer spending.
It’s also no surprise that the measures introduced in the Autumn Budget and Spring Statement seem to compound the challenge, with many owners already struggling to balance their books and looking for better ways to remain buoyant and liquid while dealing with higher costs and lower incomes.
Our key advice for any company in this situation or with concerns over the viability of its trade over the year ahead is to seek expert advice sooner rather than later – which means they do not end up in a situation where the stress of uncertainty makes it all but impossible to focus on innovation and efficiency.
Hospitality companies are no strangers to volatility, and most already manage seasonality. Many owners already know they need oversight of overheads and cash flows, to account for periods with typically lower incomes and ensure that reserves are allocated to cover outgoings between peak trading seasons.
However, we've seen an increasing number of companies reach the point of crisis, where detailed, diligent financial planning, cost control measures, and budgeting before this point could have highlighted opportunities to restructure, introduce cash flow management strategies, or potentially source financing or capital investment.’
Proactive Financial Management Recommendations for the Hospitality Sector
Michelle goes on to say, 'Professional accounting isn't just about preparing retrospective accounts, but about giving our clients the tools and resources they need to effectively plan ahead and see barriers to growth before they arrive. We ensure businesses have the support necessary to create contingencies or look at changes to their trading models to adapt to fluctuating consumer trends.
Ignoring an issue or hoping for the best is never advisable. We suggest that hospitality businesses with concerns or a lack of forecasting for the summer trading period contact our accountancy teams directly or arrange a convenient time to meet at our Chichester or Fareham offices.’
James Todd & Co offers a comprehensive range of hospitality accounting and financial management services, including bookkeeping services, tax planning, VAT reporting, and general accounting expertise. The company also offers bespoke coaching services through its Goals to Growth programme.
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About James Todd & Co
James Todd & Co have been providing accounting services for more than 30 years across Chichester, Fareham, and Portsmouth for businesses across the South East. Their clients trust them to provide bookkeeping, financial auditing and compliance, management accounting and financial advisory services.
Media Contact:
Oliver Read
James Todd & Co
01243 776938
www.jamestoddandco.co.uk
