The UK hospitality sector is facing mounting pressure in 2025, with a series of regulatory changes, economic headwinds and policy developments compounding difficulties for businesses across the country.
Operators are contending with rising labour costs, administrative burdens and fragmented regulation across the four nations, prompting fresh concern about the sector’s ability to remain resilient.
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The first months of 2025 have already brought significant challenges.
The impact of measures announced in the most recent UK Budget — including reduced business rates relief and higher employer national insurance contributions — is now being felt, particularly by small and independent businesses.
These financial pressures come alongside continuing uncertainty over future policy developments.
Terrorism legislation and alcohol pricing bring new compliance demands
The proposed Terrorism (Protection of Premises) Bill — known as Martyn’s Law — remains under parliamentary scrutiny and is expected to pass later this year.
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By GlobalDataThe draft legislation would require operators of public venues, including many hospitality businesses, to carry out terrorism risk assessments and staff training based on the size and capacity of their premises.
While the aim is to improve public safety, many in the sector fear the requirements could be disproportionately burdensome, especially for smaller venues. Up to 650,000 businesses could be affected, with industry groups calling for clearer guidance and more practical support.
In parallel, alcohol pricing policy continues to diverge across the UK.
Scotland’s minimum unit price rose from 50p to 65p in late 2024, while Northern Ireland is now progressing its own MUP legislation. Wales maintains its 50p unit price but has signalled a potential increase depending on the outcome of a review.
These regional differences are placing new pressures on multi-site operators and national retailers, who are having to adapt to varying compliance requirements.
Environmental schemes and digital ID trials introduce further complexity
Several environmental measures have taken effect or entered pilot stages in recent months.
In Scotland, a 25p charge on all single-use drinks cups is expected to be introduced before the end of the year, following a consultation last summer. This will require drinks retailers to maintain detailed records of charges collected, deductions and net proceeds, creating new reporting obligations.
Belfast has begun trialling a scheme to eliminate single-use plastic cups at entertainment venues, with the SSE Arena among the first participants. The pilot will run throughout 2025 and could lead to wider implementation if deemed successful.
Meanwhile, preparations for the UK-wide Deposit Return Scheme (DRS), scheduled for launch in 2027, continue amid controversy. Hospitality venues are no longer required by law to act as return points, though many may still feel social pressure to do so.
The Deposit Management Organisation overseeing the scheme is expected to be established this spring, with further guidance anticipated.
In England and Wales, the proposed use of digital ID for alcohol purchases under the Licensing Act 2003 is still in progress. The policy is intended to simplify age verification, particularly at busy venues and automated checkouts, but has sparked concerns over consistency, as there are no immediate plans to introduce similar measures in Scotland or Northern Ireland.
Tourism policy and local levies could affect business viability
Recent changes to tourism policy are also having an effect. The UK’s Electronic Travel Authorisation (ETA) scheme, introduced in January for non-European travellers and extended to European nationals from April, has raised concerns in Northern Ireland.
With the majority of international tourists arriving via the Republic of Ireland, local officials fear that the new £10 charge may discourage cross-border visits.
The Scottish Parliament has now passed legislation allowing councils to introduce a tourist levy, with Edinburgh the first to announce plans. A 5% surcharge is due to apply to bookings from May 2026. Wales is considering a similar charge from 2027.
While the levies aim to support local services and tourism infrastructure, they may also create new administrative obligations and raise costs for guests.
Hospitality providers have also voiced concern over the VAT threshold, fearing that higher charges passed on to consumers may push some businesses into a higher tax bracket, further eroding already slim profit margins.
With multiple layers of regulation coming into force or under review, 2025 is proving to be a year of sustained challenge for the hospitality sector.
Business leaders continue to call for more consistent policymaking, warning that without greater support or simplification, the industry risks being pushed into a period of contraction rather than growth.
