The devastating impact of the Covid-19 pandemic on the UK hospitality industry has been laid bare in a new analysis by the Office for National Statistics.
The organization looked into a number of different areas affecting the sector, pretty much all showing what a miserable 18 months it had been for businesses.
Things were supposed to get better earlier this month when Prime Minister Boris Johnson lifted most remaining restrictions in England. The problem is, this has coincided with a rise in Covid-19 case numbers across the country, prompting fears over what might happen in the next few months.
So just how bad has it been for the sector and what is in store in the future?
Chart 1: Monthly business turnover for accommodation and food and beverage serving activities sub-sectors, UK, January 2019 to May 2021
The above chart shows the monthly business turnover for accommodation and food and beverage sectors. It’s easy to spot the impact of lockdowns, and although some money will have been recovered from government schemes it does not paint a pretty picture.
Chart 2: All non-wage payments from businesses in hospitality sub-sectors, February 2020 = 100, UK, January 2020 to May 2021
Consumer spending may be bouncing back in the sector but a substantial reduction across the pandemic has had a knock-on effect in supply chains.
Data from Mastercard-owned Vocalink showed that the total value of payments hotels and holiday accommodation businesses to their suppliers and contractors in May 2021 was only 72% of its pre-pandemic level in February 2020.
Payments fell as restrictions were put in place and have not yet recovered.
Chart 3: Median pay in the accommodation and food services sector, seasonally adjusted, February 2020 = 100, UK, January 2020 to June 2021
At the same time as businesses are trying to open up again they are finding staffing more challenging than ever. Job vacancies have seen large increases and are higher than pre-pandemic levels and wages are creeping up. At the same time they are dealing with large numbers of staff having to isolate.
It’s difficult to know whether this trend will continue but if it does it presents a big challenge to the sector. The labour market is even more challenging thanks to Brexit and the impact this has had thanks to the end of freedom of movement between the UK and Europe.
“These figures from the ONS highlight how the pandemic has uniquely hit the hospitality sector and it’s devastating consequences for businesses across all parts of the market. While ‘Freedom Day’ sees 12,000 venues finally open their doors and the sector operate viably for the first time in 16 months, hospitality is far from out of the woods,” Kate Nicholls, CEO of UKHospitality said.
“For the sector to enjoy a sustainable recovery, Government will need to continue working closely with us in order to put in place the right trading environment including measures such as the extension of the business rates holiday until at least October, allowing firms to bounce back strongly, and to rebuild fragile consumer confidence. With the right support, hospitality can be at the forefront of the nation’s economic recovery, creating jobs and reviving our high streets and city centres.”