Hospitality industry faces £7.8 billion loss

27th November, 2020 by Nicola Carruthers

The hospitality industry will lose an estimated £7.8 billion (US$10.4bn) in sales if the new tier system is enforced in England next month, according to trade body UK Hospitality.

Spirits Bottles

UK Hospitality said 98% of the nation’s hospitality sector will be operating in tiers two and three

This week, UK prime minister Boris Johnson announced a strengthened three-tier system that will be enforced once England’s second lockdown ends on 2 December.

The enhanced restrictions will see bars and pubs in tier two regions only trading if serving substantial meals. In tier three, bars and pubs must shut and can only offer takeaway services.

On Thursday (26 November), the government announced that the vast majority of England will be placed into ‘high’ and ‘very high’ – tiers two and three.

UK Hospitality said this would mean that 98% of the nation’s hospitality sector will be operating in tiers two and three. If these restrictions last for the entire month of December, England’s hospitality industry could lose around £7.8bn in sales when compared to 2019, the trade group said.

The trade body’s chief executive Kate Nicholls called the enhanced measures a “huge blow to hospitality”.

She said: “These are safe spaces for people to meet, relax and socialise and the sector is desperate to get staff back to work, open their doors and, in the long term, diminish reliance on the public purse and begin driving economic recovery.

“The new tiers will see over 120,000 venues across England placed into tier two, with tens of thousands of these forced to close as they are unable to provide a table meal, either physically or financially.

“This affects the employment of nearly 1.5 million people. Under this severe a restriction, 94% of our members say they will be unviable or trading at a loss.

“For the 38,000 businesses in tier three, employing over 540,000 there is no option but to provide takeaway or close altogether.”

‘Unfair and arbitrary’

Nicholls added that there remains to be no evidence that the sector is a “problem area in terms of infection” and that venues have spent time and money on ensuring they are Covid-secure.

“It seems unfair and arbitrary that hospitality is being dealt such a harsh hand,” Nicholls said. “According to a recent UK Hospitality survey, 72% of visitors to hospitality were satisfied with the safety of our venues, compared to just 11% who were not.”

Nicholls called for “urgent further financial support” for the hospitality sector, or face the loss of “huge numbers” of jobs and the permanent closure of businesses. She adds the industry could be “fundamentally degraded for the foreseeable future”.

Earlier this month, the furlough scheme was extended until March 2021. Under the scheme, employees will be paid 80% of their current salary for hours not worked, up to a maximum of £2,500 (US$3,230), by the UK government.

Nicholls continued: “If we want to see businesses survive, then we desperately need a replacement for the Job Retention Bonus Scheme and for the government to extend the rent moratoria and broker a solution to tackle the issue of rent debt that has built up.

“If we want to give those businesses that do survive this winter a better chance at succeeding next year, then the VAT [value added tax] cut and businesses rates holiday must now be extended and grants provided to support businesses paid out at the earliest opportunity.”

In a bid to help the hospitality sector, Campari Group is calling on firms to donate 5% of their unused party budgets to industry worker relief fund, Shaken Not Broken.

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