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Hospitality is in ‘peril’ and ‘fighting’ for survival

Published:  12 November, 2021

The hospitality sector is “an industry in peril” that is fighting for its life, the latest edition of the UKHospitality (UKH) and CGA Quarterly Tracker has said.

It has revealed both Q3 2021 sales and full 12-month figures are nearly half what they were over the same period pre-pandemic.

The data shows a 45% drop in sales for the 12 months to the end of September 2021 compared to year to the same period in 2019, before Covid-19 struck, and annual sales remain £60bn below 2019’s £132bn annual turnover.

However, the tracker has said there are signs that given the right support, the sector could return to strength and drive economic growth and job creation. It highlighted this year’s Q3 sales that showed a 73% growth rate compared to the same quarter in 2020, which it said reflected the benefit of removing restrictions.

“While things are certainly moving in the right direction, recovery remains painfully slow and there are massive gaps between the numbers now and where they were before Covid-19 wreaked its havoc,” said UKH chief executive Kate Nicholls.

“Ours is an industry in peril, and this latest data reflects a sector fighting on all fronts for survival. Since trading restrictions were lifted, operators have been plagued with a labour crisis and supply chain issues, not to mention soaring inflationary costs. In addition, VAT has risen and the cap on business rates, announced in the last budget, penalises the most successful businesses in the sector as it means no business can claim more than £110,000. This means even smaller operators, with just three or four sites, will miss out on relief.”

Nicholls said the Government must look at implementing measures to support the industry. She has called for a rethink on the cap on business rates relief and for the current lower 12.5% of VAT for the sector to be retained. It is due to return to 20% in April 2022.

“If this support isn’t put in place sooner rather than later, then consumers will find themselves paying higher prices, hundreds of hospitality businesses will collapse and thousands of jobs will be lost,” she said.

UKH estimates that the sector has lost almost 700,000 jobs since March 2020 and is currently seeing 10% vacancy rates, representing a shortage of around 200,000 staff across the UK.

According to the CGA & AlixPartners Market Recovery Monitor which tracks venue openings and closures, between March 2020 and September 2021, the licensed market lost 9,900 sites equivalent to a loss of 8.6% of venues.

In October over 200 hospitality CEOs signed a letter ahead of the Budget urging the Chancellor Rishi Sunak to permanently keep VAT at 12.5%.