Trends

Service with a smile: the trends & turbulence disrupting hospitality in 2026

Sarah Hedges

Founder, PlatformAlt5

2.2.2026

The state of play: UK hospitality at a crossroads

The power behind our incredible hospitality industry is its people, who work tirelessly to deliver impeccable hospitality and service with a smile.

The UK hospitality industry is the third largest employer in the UK. 3.5 million people work in the sector, including pubs, restaurants, hotels, cafés, tourism, entertainment venues, and tourist attractions. Hospitality contributes an incredible £93 billion to the economy each year and plays a pivotal role in local communities, bringing people together for real-life social engagement. (1)

Hospitality unlocks invaluable life skills. It’s the fastest industry for learning about people, and often, behaviour is more insightful than words. Front-of-house teams hold the key to unlocking the most valuable insights about ideal customers. Yet, their environment is becoming tougher by the month.

Will the government relent on some of their ball-breaking business rates? Can AI soften the impact of rising labour costs? Will the price of beef increase more than 24.9%?

We shine a light on some of the biggest challenges and trends shaping the hospitality sector’s runway this year.

Honestly, it’s brutal out there. Buckle up as we brace for a bumpy, turbulent ride.

Business rates battleground

By far, the biggest challenge for UK hospitality in 2026 is: the impact of business rates and tax changes. For some hospitality operators, this is now a matter of survival.

In January, the UK government introduced a support package: a 15% discount and a two-year freeze on business rates for pubs and live music venues, in response to industry warnings of closures and job losses. (2) (3)

This support excludes cafes, restaurants, and hotels, drawing criticism that relief is too narrow and temporary.

Why it matters: Rising business rates and taxes are a major concern. Operators (often independent, family-run businesses employing local people) are calling for broader, sector-wide reforms

Gordon Ramsay, whose company operates 34 restaurants in the UK, including Bread Street Kitchen, Petrus and Lucky Cat, said (12):

“The Industry is facing a bloodbath. Restaurants are closing every day as a result of rising business rates, which came on top of higher energy, staffing and ingredient costs and little growth in consumer spending. I’ve never seen it so bad”

Putting pen to paper: Over 130 UK hotel and accommodation businesses, including Hilton, Butlins, and Travelodge, wrote to Chancellor Rachel Reeves demanding urgent, sector-wide support, warning that steep April 2026 business rates threaten jobs, investment, and viability, with some rates rising by 115%. (7)

Closures: a sector in retreat

Are closures really accelerating across the hospitality landscape? Let’s look at the facts:

UKHospitality released figures that showed 50% of the jobs lost since the Autumn Budget, in October 2024, were from the hospitality sector. (10)

According to NIQ’s Hospitality Market Monitor, the number of licensed hospitality premises fell by about 0.4% in late 2025. This is more than four net closures per day, reversing earlier resilience. (5)

Trade groups estimate 2,076 venues could close in 2026—about six per day—without more government help. (4)

The decline of traditional venues, including pubs, carries cultural and economic ramifications. Historical closures (averaging one pub shutting per day in 2025) highlight the fragility of community hubs. Industry leaders have voiced concern about the loss of “social fabric” as pubs and small venues disappear. (11)

Restaurants, pubs and hotels are under threat, with smaller, local and independent operators most at risk.

Battling cost inflation and tight margins

A consistent challenge facing UK hospitality is rising operating costs. Commodity price increases caused by supply chain disruption and climate change are squeezing food and drink margins. (6)

Last year, Beef increased by 24.9%, butter 18.9%, chocolate 15.4%, and coffee 15.4%.

The biggest price rises in food and drink, 2025

On top of food rising above the general rate of inflation, energy costs have increased year on year and hospitality employers continue to struggle with rising labour costs, further increasing overhead pressure (as noted by UKHospitality and echoed in broader economic reporting).

💡Operators need to double down on cost management and innovation by making their menus simpler, prioritising quality over quantity, buying locally and seasonally where possible and outsourcing specialist items when cheaper. Track waste, forecast using sales data, renegotiate suppliers, and get VAT right with a hospitality accountant.

How guest expectations are evolving

Beyond cost pressures, industry influencers highlight a shift in guest expectations and spending patterns:

A 2026 marketing trends report emphasises the “Whycation Movement”, as guests now value “why” over “where” and book experiences rooted in personal purpose, emotional connection and local authenticity. (8)

Personalisation and data-driven engagement are now expectations for all guests, whether pub regulars or hotel visitors.

Changing consumer habits force operators to rethink brand positioning and guest interactions.

💡Hilton's connected room experience welcomes guests by name on TV and lets them control room technology via the Hilton Honors app, including streaming preferences. Features include mobile check-in and Digital Key with automatic elevator access.

💡 Japan is redefining luxury through personalised, sustainable, culture-first hospitality—transforming heritage sites into boutique and eco-luxury stays, enhanced by AI and nature-based wellness. Luxury now means experiencing Japan through its people, places, and stories.

💡Small plates with big potential. 1.6 million people in the UK use weight-loss injections. Dining habits are shifting. Smaller appetites favour flavour and flexibility. Tapas-style menus let guests share, sample and waste less while staying social. Small plates mean smarter portions, stronger margins, and menus built for modern, lighter dining.

Hospitality: what’s working now

Not all hospitality sectors are performing equally. NIQ data for December 2025 reported moderate like‑for‑like sales growth (2.9%) for managed hospitality groups. Festive celebrations helped Britain’s top managed pub groups end the year on a (5.9%) high note, outpacing restaurants and bars in some cases. (9)

This means some sectors are adapting faster than others. Still, this growth may not cover year-round cost pressure.

💡Rise of the food retail brand: The restaurant brands existing beyond their brick-and-mortar stores. Ottolenghi, co-owner of nine delis and restaurants and author of several best-selling cookbooks, sells his sauces and ingredients exclusively at Waitrose.

💡Values-driven, global appeal: British-born steakhouse Hawksmoor shows how a brand can remain true to its values as it scales worldwide, offering all-natural pasture-reared beef, sustainably sourced seafood, and its iconic Sunday roast in London, Manchester, Liverpool, New York, and Chicago.

💡Over 7,000 street food trucks operate in the UK. Fuelled by our love of comfort food, value plus something a little bit exciting, the UK street food scene continues to evolve at an incredible pace.

Emerging roles: hospitality’s tech leap

While challenges are serious, at the end of the tunnel, innovation remains a bright light:

Digital and AI tools streamline operations, personalise experiences, improve efficiencies, and may even eliminate some processes altogether.

How consumers engage with brands is changing. Increasingly large language models (ChatGPT, Gemini, Claude) play a role in how consumers discover your brand, so now is the time to optimise for omnichannel discovery.

Operators embracing technology across marketing (from CRM analytics to automated customer engagement), operations, and guest experiences are in a strong position to succeed.

💡Vibe coffee: Starbucks’ AI companion translates moods, goals, and cravings into personalised drinks you can order straight from the app.

💡Efficient inventory and supply chain management: Dishoom cut food waste by 20% with AI inventory management.

💡Employee engagement: Beekeeper.io Employee engagement: Beekeeper is a mobile app that helps frontline and shift-based staff communicate better, manage daily tasks digitally, and stay engaged at work.

💡Operational efficiencies and quality assurance: Domino's uses AI chatbots for delivery route optimisation and image recognition for product quality control.

💡Fan experience: Intuit Dome, home of the L.A. Clippers, is a carbon-free arena built with fans in mind. Its steel canopy draws in fresh air and delivers climate control to every seat, while the Dome app enables mobile snack ordering and pickup. The Clippers Wall, a massive grandstand reserved for certified Superfans, creates a psychological home-court advantage.

Hospitality's next chapter

💡Operating smarter will continue to be a big theme for 2026, along with making the best use of ethical technology and delivering unforgettable customer experiences to weather ongoing turbulence.

Businesses need to continue lobbying the government and policymakers for support on taxes and labour costs.

Struggling to keep up with the latest trends? Let’s uncover the trends that actually move the needle for your brand. Get started today.

‍Sources:

Hospitality facts and statistics: UK Hospitality website: https://www.ukhospitality.org.uk/

UK government support package for pubs: Reuters, By Sarah Young (27 Jan, 2026): https://www.reuters.com/business/retail-consumer/uk-announces-support-package-help-pubs-survive-rising-taxes-2026-01-27/

Pubs and live music venues support reaction: The Guardian, Rob Davies, Mark Sweney and Tom Knowles (27 Jan, 2026): https://www.theguardian.com/business/2026/jan/27/pubs-support-package-business-rates-rachel-reeves-england-wales

Sector closure risks: The Standard roundup of UKHospitality warnings: Holly Williams (12 January 2026): https://www.standard.co.uk/business/business-news/uk-hospitality-hospitality-government-b1266129.html

NIQ: Hospitality Market Monitor for October 2025: January 2026 https://nielseniq.com/global/en/insights/report/2026/hospitality-market-monitor-january-2026/

Rising price of milk, beef, coffee hits shoppers in new cost-of-living squeeze : Evening Standard - Jonathan Prynn, Business Editor @JonPrynn (17 September 2025) https://www.standard.co.uk/business/uk-inflation-rate-supermarket-food-prices-rising-b1248123.html

130 hotel businesses write to the Chancellor demanding industry wide rate relief: This is Money, Emily Hawkings (21 January, 2026) https://www.thisismoney.co.uk/money/markets/article-15479871/More-130-hotel-bosses-write-Chancellor-demanding-industry-wide-rates-relief-not-just-pubs.html

Marketing & guest trends: 2026 marketing overview, Annop Singh Director of Marketing - Luxe Hospitality Group (NW) Limited https://luxehospitalitygroup.co.uk/hospitality-marketing-in-2026/