Firms say a "perfect storm" of increasing employment costs, energy bills and business rates, coupled with a cost of living crisis which is seeing customers spending less, has made it increasingly difficult to stay afloat.

A new survey of the sector has revealed 40pc of businesses in the region saw profits decline last year.

Now in its 20th year, Larking Gowen's Tourism Business Survey found that while both turnover and footfall were up for more than half of firms, soaring operating costs continue to squeeze profits.

Turnover and profit performance, actuals and forecasts (Image: Larking Gowen Tourism Business Survey)

As a result, a quarter plan to cut staff this year.

A further quarter said they have been forced to scale back investment into their businesses, shelving plans to improve facilities and enhance their offering for customers.

To recoup some of the additional costs of mandated minimum and living wage increases, higher taxes and energy prices, almost two-thirds of businesses put their prices up last year, with 55pc planning to do so this year.

What businesses did in 2025 and what they are planning to do in 2026 due to increased costs (Image: Larking Gowen Tourism Business Survey)

Iain Wilson, owner of Byfords in Holt, the Pigs at Edgefield and several other Norfolk hospitality businesses, said: “If you’re not reinvesting, you’re going backwards.

"Costs have reset permanently and busy no longer means profitable. People may go out less often, but when they do, they want something memorable.

"That means being absolutely clear about who you’re for, investing in experience and having the courage to stop doing what no longer works.”

Iain Wilson, owner of Byfords in Holt and The Pigs at Edgefield (Image:........

© Norwich Evening News