Hotel Cost Management Support - Government Energy Bill Relief Scheme
Reflecting on last week’s reaction to the Chancellors' “mini-budget” it would be easy to get swept away in the chaos and anger played out in the media on what might happen next. However, there is still good news by focusing on what we can control at an individual business level. Our article last week summarized recent turnaround case studies, where early intervention planning prevented terminal outcomes. The energy bill relief will play a crucial part in future turnarounds and as promised we set out the main scheme details.
GOVERNMENT SUPPORT – The Basics
In a bid to provide a degree of certainty for businesses, the Government announced the Energy Bill Relief Scheme to help protect them from rising energy costs.
How does the Energy Bill Relief Scheme work?
The scheme which started on 1st October 2022, will provide energy bill relief for businesses in the form of a discount on gas and electricity unit prices. The discount only applies to the wholesale cost of the energy.
The baseline “government supported price” will form the comparison to the estimated unit price a business would be paying during the period 1 October 2022 and 31 March 2023. This will establish the wholesale discount.
The per kWh supported price has been set at:
- £0.21 per KWH for electric
- £0.075 per KWH for gas
The relief on current wholesale energy prices should therefore be around 40%. The table below demonstrates KWH costs and distribution margins, with the 67p typical unit cost pre-the 1st of October.
The scheme will run for a six-month period from 1st October 2022 with a review after the initial 3 months. This will establish ongoing support after March 2023 for vulnerable industries.
Who is eligible?
The scheme is available to all businesses in England, Scotland and Wales who are:
- On existing fixed price contracts that were agreed on or after 1 April 2022
- Signing new fixed-price contracts
- On deemed/out of contract variable tariffs
- Flexible tariffs
The p/KWH government support for comparable contracts will be the same across suppliers, but the level of individual bills will vary. A similar scheme is due for Northern Ireland.
Help is at hand
As the energy relief only impacts your bill’s wholesale element, there’s still a need for businesses to look at energy management as suppliers continue to compete to offer the best prices. We work with a network of specialist partners, including energy brokers who support Assured Hotels' experienced team.
In addition to the short-term support and switching energy suppliers, we have the resource and expertise to identify initiatives to improve cash flow. This will include meterage improvements and CAPEX projects, all driving a green ethos that will improve margins.
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Assured Hotels offer specialist support to hotel owners and stakeholders, especially in Hotel Advisory and also Asset Management capacities. We have been engaged in turnaround and restructuring projects, trading insolvent businesses and in the acquisition or disposal of hotels on behalf of investors.
We maintain impartiality and independence free of any fixed portfolio, offering support services across all disciplines. This includes sales and revenue growth, marketing, finance and reporting, procurement, and compliance. Our flexible contracting ensures affordability, with additionally an emphasis on the development of the hotel’s senior management team. We believe this creates better returns for investors and stakeholders.
Please click here to book a meeting, email mgriffin@assuredhotels.co.uk or call 0203 916 5658.
Co-authors:
Mathew Griffin, Managing Director, Assured Hotels Assured Hotels
Dawn McHardy, Business Development Manager, EV Solutions
Hotel Cost Management Support – Assured Hotels Turnaround Case Studies
The Energy Bills Support package announced by the Government last week was very welcome news, we have worked through the detail and will be publishing comprehensive guidance outlining utility cost management. This however is only part of the story, as pressures from declining revenues and rising costs across the board continue to erode margin and cash.
Most of our current caseload is trading administrations, where we are assisting stakeholders to preserve value to an exit. We can see that insolvencies of all types are returning 2019 levels, which given the pressures on trading businesses is inevitable.
However, these very final outcomes are avoidable in many cases. We are highly experienced in advising on hotel turnaround and restructuring. We therefore highlight several successful hotel projects where early intervention has made a difference:
Hotel turnaround to achieve refinance - 150 bed hotel with multiple outlets, in the Northwest
Group turnaround to disposal – hotel group consisting of 600 keys generating £20m annual turnover in the North of England
Single asset management led turnaround – lighter touch advisory support to the management team, of a 44-bedroom Southwest hotel
Welcome to Assured Hotels
Assured Hotels offer specialist support to hotel owners and stakeholders, in both Hotel Advisory and Asset Management capacities. We have been engaged in hotel turnaround and restructuring, trading insolvent businesses and in the acquisition or disposal of hotels on behalf of investors.
We maintain impartiality and independence free of any fixed portfolio, offering support services across all disciplines. This includes sales and revenue growth, marketing, finance and reporting, procurement, and compliance. Our flexible contracting ensures affordability, with emphasis on the development of the hotel's senior management team and therefore better returns for investors and stakeholders.
Please click here to book a meeting, email mgriffin@assuredhotels.co.uk or call 0203 916 5658.