Hospitality braced for bleak midwinter

The financial sustainability of many hospitality businesses is under threat in the new year following a dramatic drop in sales on key festive trading dates.

New data from UKHospitality and CGA shows sales in pubs, restaurants and bars down 60% on Christmas Day, 31% on Boxing Day and 27% on New Year’s Eve, compared to 2019.

UKHospitality said what would traditionally be a bumper sales period for thousands of businesses is likely to be remembered as a lost chance to rebuild crucial cash reserves in the sector – delaying the recovery and leaving many businesses exposed going into the fallow winter months.

The picture for the whole of December was no less bleak. Based on a separate industry survey, hospitality businesses faced a 40% drop in sales overall for the month versus the same period in 2019 with independents suffering slightly worse than groups or chains.

Sales were especially weak for venues in Scotland and Wales where coronavirus restrictions were more stringent. The hospitality sector in Wales performed twice as badly as England, and in Scotland 2.5 times worse in the week ending January 1st.

The data shows the impact of the new omicron variant of covid-19 which spread rapidly during the month of December. UKHospitality said in the weeks prior to the new variant emerging, average sales had been recovering steadily through the autumn and had reached 98% of pre-pandemic levels.

“These sales drops versus 2019, and also against our members’ projections before the onset of the new omicron variant, will have taken most businesses from healthy trading for the month to painful losses, delaying the sector’s recovery and extending hospitality’s long covid,” said UKHospitality CEO Kate Nicholls.

Nicholls added that business’s cash reserves were severely depleted, and some would struggle to survive the first quarter of 2022.

The sector is also facing a surge in costs with VAT set to return to 20% in April along with a rise in business rates and an end to the rent moratorium. Companies are also grappling with increased labour costs, high levels of food price inflation and the soaring cost of energy.

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