By Kunal Sawhney, CEO of Kalkine (www.kalkine.co.uk)
It is exactly 12 months since the Boris Johnson government first announced a lockdown shutting down pubs, bars, restaurants, and eateries, among other establishments. At the time, the hospitality sector, which is the third-biggest employer in the nation, faced one of the worst crises in history. According to market observers, the year 2020 was the most bewildering one that impacted every business of the hospitality sector and forced some to shut shop permanently.The worst part is it’s not over yet.
According to recent government data, a 68 per cent slump in output was reported between February 2020 and January 2021. In the last one year, around 10,000 pubs, restaurants, eateries were forced to close, while around 4.8 million people lost their jobs due to the uncertainties. According to data and research consultancy firm CGA, the third lock-down had the worst effect, with the total licensed premises in January and February falling by 2,713, which comes to 46 closures every day.
Industry trade body UKHospitality has stated the on-trade sales for the sector dropped from £133.5 billion (US$182bn) in 2019 to £61.7bn (US$84bn) in 2020.The first lockdown itself cost the sector and the high street a whopping £45 billion in revenue, a joint study by the Cambridge and Newcastle Universities noted.This is equivalent to £1.4 billion per week and £200 million per day.
The night-time economy was hit as most outlets could not operate due to the lockdown restrictions. UKHospitality data shows at least 7,659 licensed premises shut shop permanently between December 2019 and January 2021.
Independent businesses were the worst hit, and small and family-run businesses were more vulnerable to closures as compared to bigger pubs and restaurants with stronger roots.
THE LICENSED PREMISES IN BRITAIN FROM MARCH 2020 TO FEBRUARY 2021
March 2020 115,108
June 2020 115,004
August 2020 113,025
October 2020 111,914
December 2020 110,229
February 2021 107,516
(Data Source- Market Recovery Monitor from CGA and AlixPartners)
Though the government launched schemes to keep the sector afloat, many firms had to lay off their staff when the crisis hit pubs, bars, restaurants, and hotels. In most cases, the profits turned into losses.As the sector is highly dependent on the seasonal rush, experts feel around 200,000 jobs around Easter, the summer holidays and Christmas were lost last year, creating a severe void.
The UK Government started pouring assistance since the first lock- down was announced. It first brought in the furlough scheme and then cutVAT and business rates.The government also announced grants based on the rateable value of premises.
In Budget 2021, the government extended the VAT cut and the fur- lough scheme, besides continuing with the business rates holiday.
LIGHT AT THE END OF THE TUNNEL
The UK was one of the first European countries to roll out the vaccination drive.Till 19 March, around 26.8 million Britons have received their first dose of vaccination, and almost 2.1 million received both doses.
Banking on the fast vaccine roll-out and the falling rate of infections, the year 2021 looks promising, despite the odds.The Boris Johnson government has already chalked out the phased reopening.
As per the plan, April 12 onwards, beer gardens and outdoor cafes can resume, where people should form a maximum group of six at an eatery or restaurant.The hotels, hostels and B&Bs will also be allowed to reopen. From May 17, restaurants will be allowed to serve meals and drinks inside the premises, while night clubs will be allowed to open from June 21.
WHERE FROM HERE?
Though the market is buoyant about the vaccine rollout and the government’s recent measures to support businesses, it is still very difficult to predict the exact way out of these uncertain times with added issues like disruptions owing to Brexit. With reports such as the UK economy expected to shrink by 4.2 per cent in the current quarter and the monthly bill for the current lockdown might be around £5 billion, it remains to be seen if the government’s efforts will fructify.
The industry view is that the hospitality sector may lead the economic recovery in the country by providing jobs to people and bringing down the unemployment numbers significantly. For that to come true, it is required that the sector be allowed to operate without any further limitations and possibly no more lockdowns or tiered restrictions.