Pub and hospitality trade bodies UKHospitality, the British Institute of Innkeeping and the British Beer & Pub Association have revealed the grim results of their latest sector-wide survey today.
The findings, from this second survey of members of all three trade associations conducted by hospitality market research company CGA, paint a catastrophic picture, as the new 3 Tier system comes into force and has been extended to London, York, Lancashire and other areas, with further announcements expected imminently.
More than three quarters (76%) of businesses were loss-making and, worryingly, the grave outlook revealed by the survey reflects views largely canvassed before the full impacts of the tier system were announced, and so are likely to be an under-estimation of the acute difficulties of the sector’s immediate prospects, unless new Government support is forthcoming
With furlough ending in just over two weeks, and the Job Support Scheme not viable for most hospitality businesses that have seen their cash flows decimated since restrictions have increased, the survey shows that by February 2021, over 750,000 jobs will be lost against employment figures from February 2020 without further Government support.
Nearly 50% of respondents believe that the restrictions in place will reduce their turnover by at least half this winter. The prediction for total business failure by the end of 2020 is now estimated to be more than 1 in 4. Over 50% of businesses are now expected to fail before the end of Q1 in 2021.
Businesses in the Medium and High Risk tiers announced by the Prime Minister earlier this week are in no man’s land, the trade bodies say. Without the benefit of furlough and government disruption grants, they will be under pressure to trade with an impossibly low level of custom, forcing them to make large sections of their staff redundant and to close their doors, potentially for ever.
The trade bodies now urge Government to urgently rethink the support offered to hospitality businesses across all 3 tiers, to avoid unprecedented levels of unemployment and business failure across the sector.
They say there must be an immediate, sector-specific extension of the Jobs Support Scheme with no employer contribution until restrictions are lifted for all tiers; Government Disruption Grants should be made available for all venues, across all tiers; and a review of any restrictions placed on venues must take place at least every 2 weeks.
Safeguarding hospitality venues against business failure is the priority and without these measures in place, the hospitality sector, they say, will not survive to provide the employment and tax revenue that will be needed for a safe and sustainable recovery in 2021 and beyond. The most secure route to a swift recovery is to ensure that businesses survive this winter.
A joint spokesperson for the trade bodies, said “There can be no doubt of the devastating impact that the Government’s restrictions are having on hospitality and pub businesses across the UK. Without urgent sector-specific support for our industry, massive business failure is imminent and hundreds of thousands of jobs will be lost around Christmas from a sector that was in growth at the beginning of this year, as well as in the supply chain that supports them.’
“While there are any restrictions placed on hospitality and pubs, there must be financial support in place across all tiers of risk.”
Trade body UKHospitality says that the Government’s new, tighter tier system is at best a restrictive straitjacket and at worst a lockdown in all but name for hospitality businesses, according to UKHospitality.
The trade body has warned that the measures, which will see businesses in tier 3 permitted to provide takeaway only and those in tier 2 restricted to substantial meals, will lead to permanent closures and job losses.
UKHospitality Chief Executive Kate Nicholls said “The Government is making a point of saying that these measures are needed in order to save Christmas. In reality, they are killing Christmas and beyond for many businesses and their customers who look forward to, and rely on, venues being open at this time of year. Sadly, for many staff, it will be a Christmas out of work.”
“If there needs to be a tightening of restrictions, it should not come at the expense of hospitality. Only a small fraction of cases have been linked to our businesses and venues have shown that they can provide safe environments for customers and staff. If the Government pursues this course of action, it is going to mean permanent closures and job losses.’
“Tier 3 will be lockdown in everything but name for hospitality and will leave businesses almost no room for manoeuvre. With household mixing still not permitted, businesses in tier 2 are going to find revenues severely slashed at a crucial time for the sector.
“Immediate financial support must now be rapidly increased as many businesses will be forced to close, in some cases permanently. Our member survey has shown the current Tier 3 restrictions, which will now effectively apply to Tier 2 areas, will see 94% of hospitality businesses operate at a loss or simply become unviable. The new Tier 3 simply means no chance of trading out of this. Government must also confirm that the increased State Aid cap of €3m will be applied – as this is preventing the distribution of grants to tens of thousands of businesses employing nearly a million people.”
“Adding a degree of flexibility to the mandatory curfew will help with dispersal of customers, but it doesn’t change the fact that businesses won’t be able generate revenues after 10pm.”
“The big stumbling block for businesses is the lack of household mixing. This will be a huge hit that will be felt all the harder because it is almost Christmas. The Government could throw the sector a lifeline if it adopted the Welsh model of limited household mixing to let people socialise safely without jeopardising public or business health.”