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Highlights
- Rapidly rising prices may lead to closures of breweries and pubs across the UK over the coming months as their bills surge by 300%.
- The heads of the UK’s six largest pubs and brewery businesses have called for swift action by the government to tackle the crisis.
- Ahead of the energy price cap in October, energy regulator, Ofgem, warned that UK households would witness an average hike of 80% in their bills.
The hospitality sector was among the worst hit sectors during the Covid-19 phase, and its condition may not improve anytime soon. The industry bosses have recently warned that the rapidly rising prices may lead to closures of breweries and pubs across the UK over the coming months as their bills surge by 300%!
An open letter to the government has been endorsed by the heads of the UK’s six largest pubs and brewery businesses, calling it out to take swift action to prevent further harm to the sector, which may prove irreversible if ignored. But now, Admiral Taverns, St Austell Brewery, Greene King, JW Lees, Carlsberg Marston’s, and Drake & Morgan may have set the cat amongst the pigeons with the recent developments.
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According to Nick Mackenzie of Greene King, pubs may not be able to settle their bills, and people would also face job losses, which would mean that all the efforts made during the pandemic to keep the sector afloat would go in vain. Operators have been dealing with soaring energy bills lately, especially due to the tragic Russia-Ukraine war pushing up the costs of oil and gas.
Ahead of the energy price cap in October, energy regulator, Ofgem, warned that UK households would witness an average hike of 80% in their bills once the new cap comes into play. Nevertheless, companies don’t function with a regulated price cap, with a few pub owners warning that their bills have increased fourfold or that they are facing trouble getting suppliers ready to power their sites when the renewal of contracts takes place.
Amid the surging energy bills, UK investors can keep an eye on the hospitality sector. Kalkine Media® explores the following hospitality stocks that UK investors can consider.
Compass Group plc (LON: CPG)
The shares of the UK-based global contract foodservice firm, Compass Group plc, surged by 0.11% at around 8:15 AM (GMT+1) as the market opened on Tuesday while trading at GBX 1,878.00. With the market cap of this FTSE 100 constituent standing at £33,135.46 million, it enjoyed an EPS (earning per share) of 0.20. Providing investors with an annual dividend yield of 1.2%, the company’s turnover (on the book) lies at £2,719,276.11. It has given significant returns on a yearly and YTD (year-to-date) basis as of 30 August, which stand at 25.44% and 14.23%, respectively.
InterContinental Hotels Group plc (LON: IHG)
The international hospitality firm’s shares plunged by 0.51% at around 8:20 AM (GMT+1) as the market opened on Tuesday while trading at GBX 4,726.00. IHG’s market cap stood at £8,740.77 million, with an EPS of 1.45. With an annual dividend yield of 2.4%, the company’s turnover lies at £1,093,148.37. It has given positive returns yearly, but its YTD return lies in the negative zone as of 30 August, at 2.50% and -1.36%, respectively.
PPHE Hotel Group Limited (LON: PPH)
The shares of the international hospitality real estate enterprise, PPHE Hotel Group Limited, were trading at GBX 1,440.00 at 8:30 AM (GMT+1) on Tuesday. The market cap stood at £612.15 million and has given positive returns on a YTD basis of 0.16%.
