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Research confirms protracted on-trade recovery

Published:  22 June, 2020

A new survey of UK Hospitality (UKH) members has confirmed that hospitality businesses are expecting a lengthy and painful recovery, with levels of trade expected to be significantly supressed for many months to come.

The findings paint a gloomy picture of low expectations with responses received from a range of different operators in a sector that is, in normal times, the UK’s third largest employer and generates £39bn of tax for the Exchequer.

The findings of the survey, released today, has promoted UKH to reiterate its call on the government to urgently confirm 4 July as the date the hospitality sector reopens. 

The tradebody also took the opportunity to urge Westminster to make renewed commitments on extended support for the sector in order to prevent widespread business failure and further job losses.

Respondents were asked to give their expectations on trade in the three months following reopening and in December. They were also asked about the difference in trade between having a 1 metre social distancing rule versus a 2 metre rule. 

Overall, businesses “overwhelmingly” expect a very slow recovery in the second half of 2020, with a worst-case scenario in December of trade at around a third of the previous year’s level if the 2 metre rule remained in place, said UK Hospitality. 

Even at 1 metre, trade is only expected to be at just over half the level compared to the year before.

The shorter-term outlook was yet more downbeat, with expectations for August 2020 at between a huge 78% and 65% decline depending on the level of social distancing required in venues.

The bleak outlook from operators should sound the alarm with governments across the UK, said Kate Nicholls, CEO of UKH.

“First things first, we urgently need confirmation of the reopening date for hospitality without further delay. Businesses need time to prepare and the first step on the road to recovery is confirmation of when they can open their doors again. Those who rely on advance bookings, such as hotels, leisure parks and attractions need answers now,” she said.

For most venues, she added, operating with the 2 metre social distancing rule was “financially unviable”.

“If the current review on social distancing recommends it is safe to do so, we would urge the government to adopt the internationally-recognised standard of 1 metre. Such a reduction would be a huge boost for the sector and prove critical to the survival of the vast majority of businesses,” she said. 

With trade forecast to be materially down for “many months to come”, it was vital that the government considered targeted support to help assist the sector’s recovery, such as a cut in tourism VAT and Air Passenger Duty, support for missed rent payments during closure and the creation of an autumn Bank Holiday, she reiterated. 

Last Friday, new research by Hallgarten & Novum Wines revealed that having social distancing measures in place was the key concern for consumers when they return to the on-trade post-lockdown.