In the face of rising energy prices, UK hospitality businesses are grappling with unprecedented challenges. Hotels, restaurants, bars, and venues are being forced to rethink how they manage energy, not just to cut costs, but to stay in business.
The hospitality sector has always been energy-intensive, with round-the-clock operations, heating, cooling, and hot water demands. With the ongoing energy crisis, this pressure has become critical. So, what can hospitality leaders do to protect their bottom line as costs soar?
While energy efficiency measures can help reduce costs over time, the immediate opportunity lies in negotiating better energy contracts. Here’s how the right tactics, backed by the right partnerships, can make a meaningful difference.
Understanding the Energy Market: The Impact on Your Business
Energy prices in the UK have been highly volatile in recent years, driven by geopolitical tensions, global supply chain issues, and domestic challenges. For businesses operating 24/7, the cost increases are not merely inconvenient, they are a major financial threat.
The hospitality sector has been hit particularly hard. According to UKHospitality, energy costs in hospitality businesses increased by an average of over 150% between 2021 and 2023, with many operators seeing bills more than double. In a recent survey by the British Beer and Pub Association, over 50% of pubs reported that energy costs were now a greater threat to their survival than any other operating cost.
There have already been consequences:
- Thousands of venues across the UK, including pubs, hotels, and restaurants, have closed since the start of the energy crisis.
- In some cases, businesses have cited energy costs alone as the final straw, with fixed-term contracts expiring and renewal prices deemed unaffordable.
- Operators are reporting that profit margins are being wiped out, even with strong customer demand.
The UK’s energy mix has also shifted significantly. Historically reliant on natural gas, nuclear, and renewables, the country’s heavy dependence on gas has made prices particularly sensitive to global supply disruptions.
As Kate Nicholls, CEO of UKHospitality, warned in 2023:
“For many in our sector, energy has become an existential issue. Without urgent support and better contracts, we risk losing vital businesses that are at the heart of our communities.”
Understanding these dynamics and pressures gives businesses the insight needed to anticipate market movements and negotiate contracts that offer genuine protection.
Will Energy Prices Ever Return to Pre-COVID Levels?
While global energy markets are stabilising compared to the peaks of 2022, most experts agree that prices are unlikely to return to pre-COVID levels in the foreseeable future.
A combination of long-term factors, including the shift away from cheap Russian gas, the cost of investing in renewable energy infrastructure, inflationary pressures, and ongoing geopolitical tensions means that higher baseline prices are expected to continue.
The UK Government’s Energy Bill Relief Scheme and temporary support measures have cushioned the blow for some businesses, but these interventions are being scaled back.
Future pricing is expected to remain volatile rather than dramatically falling meaning that securing smart, competitive contracts and improving energy efficiency will remain essential for hospitality businesses.
As the Energy & Utilities Alliance commented in 2024:
“We are now living in a fundamentally different energy economy compared to 2019…businesses must plan for higher long-term costs rather than hoping for a return to the past.”
Why Energy Prices Are Skyrocketing
Several key factors are behind today’s energy price crisis:
1. Geopolitical Factors:
Conflicts such as the war in Ukraine have disrupted international energy supplies, particularly gas, pushing prices across Europe higher.
2. Supply and Demand:
Weather extremes and global supply issues can create sudden surges in energy demand or shortages, driving price spikes. Hospitality businesses, with high seasonal demands for heating and cooling, are especially exposed.
3. Inflation:
Rising global inflation, driven by supply chain constraints and increased raw material costs, has raised the cost of producing, transporting, and distributing energy.
By understanding these forces, businesses can better anticipate market movements and strengthen their negotiating position.
Negotiating the Right Energy Contract: A Lifeline for Hospitality
Energy procurement isn’t simply about finding the lowest price, it’s about securing the right contract for your business’s specific needs. Here’s how:
1. Know Your Energy Consumption
Analyse your energy use thoroughly before switching suppliers. Tariff structures vary depending on when and how much energy you use. Businesses with defined peak and off-peak times (common in hospitality) can often secure more favourable rates with a tailored contract.
2. Lock in Prices with Fixed Contracts
Fixed-rate contracts offer cost stability for one to three years, protecting you from market volatility. While initial prices might seem higher than variable contracts, they provide peace of mind and easier budgeting over time.
3. Seek Flexibility in Your Contract Terms
Flexible contracts that allow adjustments to your energy usage can be highly valuable. They enable you to take advantage of lower prices during low-demand periods and minimise the impact during peaks.
4. Build Long-Term Partnerships with Trusted Suppliers
An experienced broker or advisor can help you navigate the complexities of the market and secure competitive contracts. At Invew, we work with a trusted panel of suppliers, offering tailored solutions that reflect the specific needs of hospitality businesses.
5. Regularly Review Your Energy Contract
Energy markets move fast. Reviewing your contract annually, even if you’re locked into a longer-term deal, helps ensure you’re positioned to take advantage of better rates when they arise.
The Benefits of Working with an Energy Broker
Navigating today’s complex and volatile energy market can be overwhelming for hospitality businesses. Working with an experienced energy broker can deliver a range of advantages that go far beyond simply finding a cheaper deal.
1. Access to a Wider Market
Energy brokers have relationships with multiple suppliers, including some that don’t advertise directly to the public. This means you can access a broader range of options, often at more competitive rates than approaching suppliers directly.
2. Expertise and Market Knowledge
A good broker understands the energy market’s complexities, including the timing of price movements, contract structures, and hidden charges. They can advise you on the best time to lock in a contract and help you avoid costly mistakes.
3. Tailored Solutions for Your Business
Every hospitality business is different. An energy broker can help you find contracts that are tailored to your specific consumption patterns, operational needs, and long-term plans, rather than offering a one-size-fits-all solution.
4. Time and Resource Savings
Comparing dozens of offers, negotiating terms, and monitoring market changes can take up significant time. An energy broker handles this workload for you, freeing up your team to focus on running and growing your business.
5. Ongoing Support
Energy brokers don’t just secure a contract and walk away. Many offer ongoing support throughout your contract term, from helping with billing issues to advising when to renew or renegotiate as market conditions shift.
6. Risk Management
With energy prices remaining volatile, brokers can help businesses build a procurement strategy that protects against future price spikes, offering greater budget certainty.
The Growing Problem of Pushy Energy Suppliers and Collectors
As energy costs have risen, so too has the pressure from some suppliers and third-party debt collection agencies.
Unfortunately, mistakes in billing, meter identification, and account management are becoming more common, and when errors occur, businesses can find themselves unfairly chased for debts they don’t owe.
In many cases, suppliers or collection agencies prioritise aggressive recovery tactics over properly investigating disputes. Hospitality businesses, already facing high operational pressures, can be bombarded with threatening emails and calls demanding immediate payment, often under the threat of disconnection.
Without specialist support, it’s all too easy for businesses to feel forced into paying incorrect charges simply to avoid the risk of being cut off, with potentially devastating consequences for their operations and reputation.
At Invew, we are committed to standing between our clients and these unfair practices. The following real-world example shows just how critical it can be to have the right team fighting your corner.
Case Study: Protecting a Restaurant from an Unfair Energy Dispute
Recently, one of our restaurant clients in Dundee faced a potentially devastating situation. Due to an administrative error, Scottish Power had misidentified a domestic customer’s gas meter, located above our client’s premises, as belonging to the restaurant. The domestic customer had accrued thousands of pounds in unpaid energy bills. Rather than identifying the true account holder, Scottish Power passed our client’s details to a third-party debt collection agency.
What followed was relentless and deeply distressing:
- The third party began harassing our client with daily emails and phone calls, demanding immediate payment of the outstanding debt.
- They threatened to disconnect the restaurant’s gas supply if payment was not made, a move that would have forced the restaurant to close temporarily, causing serious financial and reputational harm.
Thankfully, the restaurant owner contacted Donna, his dedicated Account Manager at Invew, who immediately took action.
Over the course of a difficult and intensive week, Donna coordinated between British Gas, Scottish Power, and the third-party agency to challenge the claims and protect our client’s business.
Through numerous calls and detailed investigations, Donna was able to prove that the meter Scottish Power was pursuing was not linked to our client’s premises. She provided the correct meter serial number, which finally led Scottish Power to acknowledge their error. Scottish Power then instructed the third-party collector to cease all contact.
If Donna had not intervened, there is a very real possibility that the client would have been pressured into paying a debt that was never theirs, or worse, suffered a gas disconnection that would have forced the restaurant to close for days, damaging the business both operationally and financially.
This case is a powerful reminder of the risks hospitality businesses face, and how essential it is to have the right support on your side.
Key Takeaways for Hospitality Businesses
Managing energy costs requires a proactive, strategic approach. Focus on:
- Understanding your consumption patterns: Tailor your contract to fit your usage.
- Choosing fixed-rate contracts: Achieve price certainty and budget with confidence.
- Prioritising flexibility: Stay agile as market conditions change.
- Partnering with a trusted advisor: Leverage expert insight to secure better deals.
- Reviewing contracts regularly: Stay ahead of market shifts and opportunities.
How Invew Can Help
At Invew, we specialise in tailored energy solutions for UK hospitality businesses. We don’t cover the entire market, but we work with a carefully selected panel of trusted suppliers to secure competitive, reliable contracts for our clients.
Our role doesn’t stop once a contract is signed. We stand by our customers throughout their entire energy journey, whether that’s helping to manage bills, advising on renewals, or, when necessary, fighting their corner against unfair treatment.
As the case study above shows, we are willing to go the extra mile to protect our clients. When one of our restaurant customers faced unjust demands for thousands of pounds, we stepped in, challenged the issue directly with suppliers and third parties, and ensured their business could continue operating without disruption.
We’ll help you:
- Secure competitive contracts aligned with your usage patterns.
- Navigate market complexities with expert support.
- Protect your business from unfair practices and stand up for your interests when disputes arise.
- Provide ongoing contract management, advice, and support throughout your agreement.
If you’re ready to take control of your energy costs and want a partner who will stand by you when it matters most, contact Invew today for a no-obligation consultation.
Conclusion
Managing energy costs has become one of the biggest challenges facing the hospitality sector — but it doesn’t have to be overwhelming. By understanding market drivers, negotiating smarter contracts, and partnering with the right advisor, businesses can turn a major threat into an opportunity for long-term resilience.
At Invew, we’re here to help you weather the storm, and build a stronger future.
