Can employee benefits help the hospitality sector stay open?

Earlier this month The British Beer and Pub Association warned that a pub a day would close in the UK this year – predicting 378 closures, costing 5,600 jobs.

Workers are also leaving hospitality for other reasons – greater financial security, better work-life balance and in some cases, to decrease stress.

In lieu of pay rises, employee benefits can be a highly cost-effective way for businesses who’ve remained open to keep overheads down, improving the overall wellbeing and morale of workers and critically, retain talent – if, they get it right.

Challenges faced by the sector

The hospitality sector has been faced with many financial challenges this year. Policy changes such as the 1.2% rise in employer contributions to National Insurance, and the 77p increase per hour in the National Living Wage have caused staffing costs to rise. On top of this, the high cost of living has decreased consumer spending.

For businesses who’ve remained open, unfortunately its employees shouldn’t expect a pay rise anytime soon. Zest’s research into the challenges facing UK employers finds that nearly all (94%) hospitality employers say that the rise in National Insurance contributions means that salary increases are off the cards this year. And due to these stagnant wages, a quarter (27%) of hospitality businesses have lost talent in the last 12 months – higher than all other sectors.

The value of employee benefits

Salaries are of course vital to providing financial security for employees, however, with two thirds (65%) of hospitality workers saying that benefits packages are the most important thing they look for in employment – higher than the average across all sectors (52%) – there lies a clear opportunity for the industry to harness.

Employer investment in taxable benefits packages can reduce the National Insurance burden on firms whilst delivering enhanced support to employees. Other tax-efficient approaches, such as salary sacrifice, can also reduce business costs whilst lifting staff morale, providing cost-effective financial support to a workforce.

The importance of getting it right

While employee benefits can contribute to a more compelling employee proposition, offering improved value for money to employees and employers alike – these effects will only be felt if businesses get it right.

As it stands, half (49%) of hospitality employees don’t use the majority of the benefits available to them, highlighting a clear disconnect between what it is they want, and what it is that their employers are offering them.

To reap the rewards of a good benefits package and gain a competitive edge, the sector must listen closely to the needs of its workforce.

How can technology help?

One-way businesses can ensure that they are meeting the unique needs and preferences of their employees is through technology.

Employee benefits technology provides detailed insights and data into benefit take up, helping businesses understand how employees are using what’s on offer and giving them the flexibility to adapt as needed. Offering perks workers want, and will use, can help to boost morale, increase engagement, and importantly, the chance of someone staying with a company.

As hospitality businesses continue to weather the storm, the value of good employee benefits packages will only increase. Listening to what employees want, and delivering on these needs effectively, is one tool the hospitality industry can use to ensure it keeps its doors open for good.

These findings from Zest have been conducted by independent research agency Opinium which surveyed 2,000 UK employees weighted to be nationally representative and 872 HR decision makers (minimum 50 respondents per industry) between 1^st – 12^th February 2025.