Kate Nicholls, chief executive of trade body UKHospitality, told MPs on the Business, Energy and Industrial Strategy committee on Tuesday that the group's latest research suggests one fifth of staff are not set to return to hospitality once furlough comes to an end.
Nicholls said the surge in vacancies in the sector is being fuelled by several factors, including a lack of available student workers in cities, employees moving into other sectors amid on-off shuttering of pubs and restaurants, and the fact many people have moved out of city centres in the pandemic.
"We are seeing labour shortages across hospitality,” she said. “We are seeing a vacancy rate in hospitality of around 10%. We are short of 200,000 workers and we are actively trying to recruit for those."
"You have a labour market in our sector which is hot and tighter than we might have anticipated," she added.
The committee also heard how the staffing crisis is being compounded by the fact that one in five high street workers are self-isolating due to Government pandemic tracing rules. Bosses also fear the situation will worsen.
Nicholls said: "We have one in five hospitality staff in isolation, and we have particular concerns as around 60% of our staff are under 30.
"The changes to allow double-vaccinated people to avoid isolation won't kick in in a material way until September because the workforce won't have been able to have their second jabs until then.
"We believe we need to have a test-to-release policy to help them work.
"For many of our small businesses, if you lose one or two of your workers you don't have enough people to open at all, and obviously that has huge ramifications."
The BEIS committee is carrying out an ongoing inquiry into the impact the pandemic has had on businesses and workers across the hospitality, retail and property sectors.
Helen Dickinson, chief executive of the British Retail Consortium, appeared alongside Nicholls and said there was a similar proportion of shop worker absences due to isolation rules - with some shops seeing vacancy rates of around 20%.