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Two years of Covid-19 does £115bn damage to hospitality sector

Written by Robert Moore Marketing Manager 17 February 2022

The full extent of the damage done to the hospitality sector during the covid pandemic has been revealed – a £115bn loss. The sector has racked-up £114.8bn of lost sales versus what was expected for 2020-21. With a full 24-months of data available, hospitality, which in normal times generates up to £140bn-a-year, has lost 43% and 45 full weeks of sales since March 2020.

On top of these catastrophic losses, the sector is facing rising costs across the board and UKHospitality is urging the government to continue its support of the industry by keeping VAT at its current level of 12.5%. UKHospitality chief executive Kate Nicholls said: “These figures lay bare the utter devastation that two years of this terrible pandemic has wreaked on the third largest private sector employer in the UK, with thousands of businesses closed, many on the brink of collapse, and countless jobs lost. The last thing operators need – and which a lot of them simply wouldn’t survive – is a VAT increase. Businesses big and small have been left with depleted cash reserves and crippling debt as covid loans as well as contending with a gaping hole of 400,000 job vacancies, as more than 80% of hospitality businesses report they have roles to fill. Who’d have thought two-years-ago that we’d now be looking at a once vibrant and dynamic industry brought to its knees? Tragically, in addition to the devastating monetary losses are the damaging and long-term psychological effects on thousands of people in our sector who have lost their livelihoods and, in some cases, seen their life’s work ruined. But two years on, and with all restrictions about to end, there are signs of hope and recovery. With government support, hospitality – which is full of energetic, creative and entrepreneurial people – must be at the vanguard of the UK’s wider post-pandemic recovery.”

The latest edition of the UKHospitality and CGA Quarterly Tracker reveals hospitality enjoyed £17.3bn (121%) final quarter growth in 2021 compared with the same period the year before. However, that is still down 32.3% in the 12-months to the end of last December versus the 12-month period ending December 2019. That is the equivalent of a £43bn loss across hospitality in 2021 against expected 2019 levels – the last full year with which to compare, after 2020’s lockdowns. UKHospitality said the final quarter growth shows that when given the opportunity – and despite “Plan B” being in place for the industry’s busiest time of the year – hospitality “can and will be the leading contributor to the UK’s economic recovery, if given the right support”. UKHospitality is therefore pressing government to keep VAT at 12.5% beyond April, and last week gave its backing to Hospitality Rising, a planned £5m industry-wide drive to recruit the 400,000 people needed to ease the staff shortage crisis.

Despite these appalling figures generally the sector has not seen a huge increase in actual insolvencies.  Businesses have remain closed and are waiting for demand to pick up enough or alternatively they have simply carried on in a much reduced capacity.  Covid debts are still not being chased hard and some councils have been able to hand out some grants to hospitality businesses that could not open as customers stayed away due to the worries about the Omicron variant despite there not being an actual lockdown.

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