More Tourists, Fewer Jobs: The Hospitality Paradox After the Budget

Walk into a seaside town this summer and the picture looks bright: hotels are booked out, restaurants have waiting lists, and attractions are heaving with visitors. On the surface, you’d expect businesses to be hiring in droves. After all, domestic tourism is booming — 68.6 million day visits in April 2025, up 10%, with spend climbing to £48.4 billion (+6%). 

But behind the scenes, the numbers tell a different story. Hospitality shed 22,369 vacancies in June compared with last year, a 25% drop. Since the Budget, the sector has shouldered 53% of all UK job losses, nearly 89,000 roles gone. 

For executives, this paradox runs deeper than headcount. Why is a sector that’s serving more customers than ever choosing to shrink its workforce? Is this the fallout of policy and tax changes, the quiet advance of automation, or a structural reset in how hospitality now runs? The answer is layered and that’s what this blog sets out to unpack. 

The Numbers Behind the Dip 

Normally, the story after summer is simple: the season ends, and businesses hire again to gear up for autumn and the Christmas rush. Not this year. 

• Payroll employment dropped by 109,000 in May 2025 – the steepest fall since the early COVID shock. 
• Hospitality ads shrank by 22,369 in June, a 25% year-on-year dip. 

That’s not a slowdown. That’s a brake slam. 

And the shape of hiring is changing too: 

• Contract roles are up 22%. 
• Permanent jobs are down 9%. 

So what does that tell us? Right now, it looks like businesses are trading certainty for flexibility. It works in the short run – less risk, lower commitments. But over time, the sector could find itself running on a thinner pipeline of talent. Fewer permanent hires today mean fewer supervisors and managers tomorrow. And that’s the quiet cost hiding behind those vacancy numbers. 

It raises a bigger question: if hospitality’s future workforce is built on contracts and casual hires, what happens to stability, loyalty, and service quality? 

What’s Really Driving the Decline 

Financial Pressures Post-Budget 

• The Budget didn’t just raise costs. It rewired them. 
• NIC threshold changes alone added billions to employer bills. 
• The hardest hit? Part-time and seasonal staff that hospitality relies on. 

Then add in: 

• Rising VAT. 
• Energy bills that refuse to ease. 
• Property taxes climbing through the “multiplier reform”. 

Suddenly every hire looks risky. Expensive. Maybe even unaffordable. 

Shifts in Hiring Models 

• So what happens when costs climb? Contracts change. 
• Employers are leaning on zero-hour and part-time deals instead of permanent roles. 

And here’s another twist: 

• Ordering apps. Self-service kiosks. AI-driven bookings. 
• Technology is quietly doing the work that used to belong to seasonal staff. 

This isn’t a pause on hiring. It’s a workforce redesign. 

Regional and Sectoral Breakdown 

Not every part of the sector is feeling it the same way. 

• London is still resilient, helped by international arrivals. 
• Regions and coastal towns face thinner margins and more seasonal demand, so the cuts are harsher (The Caterer). 

By sector: 

• Hotels are pouring money into tech to plug gaps. 
• Pubs are disappearing, with more than 2,200 closed in five years. 
• Restaurants, especially mid-market chains, are shelving expansion plans. 

The closer you are to discretionary spending and seasonal swings, the sharper the cuts. That’s the pattern. 

💡 Insight: This isn’t just fewer job ads. It is three forces colliding: higher costs, new staffing models, and uneven regional resilience, all redrawing hospitality’s employment map.

The Bigger Implications for Leaders 

Talent Pipeline Degradation 

• Entry-level jobs are disappearing. 
• That means fewer supervisors, fewer managers, fewer leaders down the line. 

Hospitality has always been the “first job” sector. The place where young workers cut their teeth. Where careers are born.
But if that first step isn’t there, the whole ladder starts to wobble. 

And the cost? A thinner pipeline of skilled, loyal people. Exactly the thing the industry will be crying out for in a few years’ time. 

Service & Brand Risks 

• A lean team might balance the books. 
• But what about the guest experience? 

Picture peak season: 

• Staff stretched. 
• Wait times rising. 
• Service quality dipping. 

Guests don’t forget that. They talk about it. They post about it. And when they do, no marketing budget in the world can fix the damage. 

Saving margin today is one thing. Losing market share tomorrow is another. 

Strategic Re-Prioritisation 

• Leaders are shifting focus. 
• Less about expansion. More about survival. 

Retention and upskilling are the buzzwords right now. Get more out of the people you already have. Hold on tight to experience. 

At the same time: 

• Growth projects are shelved. 
• Capital spend is delayed. 
• Everyone is waiting to see what the November Budget brings. 

But waiting carries its own risk. Demand won’t wait. Competitors won’t wait. When recovery comes, will the sector be ready? 

What It Means for Job Seekers 

Hospitality used to be the easy first step into work. A summer job. A weekend shift. A way to get a foot on the ladder. That is no longer guaranteed. With fewer vacancies on offer, the competition is tougher, and the nature of the roles themselves is shifting. 

What has changed? 

• The fight for fewer jobs: When ads drop, employers can take their time. More trial shifts, longer probation, tighter screening. It is not just about filling a slot anymore, it is about filtering for the most adaptable. 
• Security replaced by flexibility: Instead of stable contracts, workers get variable hours. Good for operators managing costs, but tough for staff who see wages swing with footfall. Some patch this by juggling two or three roles at once. 
• Skills that stand out: Guest service still matters, but digital know-how is quickly becoming the edge. Being fluent with POS systems, booking apps, or self-check-in tech now makes the difference between landing a job and missing out. 

The result? For job seekers, hospitality is not closing its doors, it is changing the locks. The sector is rewarding flexibility and tech confidence while leaving those without it at risk of being shut out of what was once the UK’s most accessible entry point to work. 

Future Outlook 

Short-Term 

Winter will be the first real test. Christmas markets, ski travel, and city breaks usually bring a seasonal hiring bump. Operators may bring in extra staff if demand holds up. 

But most of these roles are unlikely to be secure, full-time positions. They will be casual shifts, temporary contracts, and seasonal cover. The industry is still cautious, filling gaps without committing to long-term payroll. 

Long-Term 

Looking further ahead, the shape of the workforce could change permanently. Signs already point to a leaner model: fewer permanent staff, greater reliance on tech, and a heavier use of flexible labour. 

Not every operator will face this equally. 

• Boutique hotels and luxury dining can attract talent through higher pay, stronger brands, and career-building opportunities. 
• Pubs and mid-market restaurants are more exposed, where thin margins collide with high guest volumes. 

This divide may reshape the sector, widening the gap between premium players and mass-market operators. 

Policy Wildcard 

Government policy could change the picture. Relief on VAT or NICs would create breathing space for businesses to rehire and reinvest. At the moment, speculation around the November Budget leans in the other direction, with talk of further tax rises keeping executives cautious. 

That leaves many businesses waiting. Investments are on hold, hiring plans delayed. The danger is clear: if relief comes too late, the sector may have already lost vital skills and service capacity. 

What’s the Bottom Line? 

The fall in job postings is not just a seasonal blip. It points to a bigger reset in how hospitality thinks about people, costs, and growth. 

For leaders, the challenge is balance. Leaner teams and automation can keep margins in check, but long-term strength comes from building a workforce that can deliver consistent service and adapt to change. Both matter. 

One shift we are already seeing is how executives are protecting their own bandwidth. By moving routine functions like finance and accounting into the hands of trusted outsourcing partners, they create space to focus on what really counts: rebuilding teams, navigating policy shifts, and shaping guest experiences that drive loyalty. 

The choices made now will decide whether the sector emerges simply leaner, or leaner and stronger. And that is a decision being written as much in boardrooms as it is on the frontlines of hotels, pubs, and restaurants. 

Originally published Sep 03, 2025 05:09:33, updated Sep 04 2025

Topics: Finance & Accounting, Hospitality Accounting