Home Business NewsBusinessBusiness Growth Fourth-quarter openings bring positive signs for hospitality, but Omicron dents recovery

Fourth-quarter openings bring positive signs for hospitality, but Omicron dents recovery

by LLB staff reporter
20th Jan 22 10:10 am

Britain’s hospitality sector grew modestly in the last quarter of 2021, the new Market Recovery Monitor from CGA and AlixPartners reveals—but tough trading conditions now threaten to halt the sector’s upturn.

The Monitor recorded a 1.6% increase in site numbers between September and December 2021—the first quarter-on-quarter growth for more than five years. It highlights particularly encouraging growth of 1.8% in the number of independent venues, which have been vulnerable to closure during lockdowns and restrictions since early 2020. The report also indicates a 1.9% increase in venues in both city centres and on high streets, where footfall has suffered since the start of the pandemic.

However, the Monitor emphasises COVID-19’s damage to hospitality and reveals the fragility of the sector’s recovery. Britain now has more than 8,000 fewer pubs, bars, restaurants and other licensed venues than in March 2020—equivalent to a net loss of around 13 sites a day.

Despite fourth-quarter growth, the future of more hospitality businesses is now under threat after a collapse in sales over Christmas and New Year, as concerns about the Omicron variant spread and fresh restrictions were introduced in Scotland and Wales, affecting over 16,000 sites – equivalent to 15% of the GB licensed market. The sector also faces a host of operational pressures, including rapidly rising food and energy costs, staff shortages and supply problems.

Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA, said, “The increase in sites over the last three months of 2021 shows the remarkable resilience and entrepreneurialism of hospitality, and the enduring appeal of Britain’s pubs, bars and restaurants. But after disappointing December trading and challenges mounting, both new and established businesses are vulnerable as we begin 2022. These positive numbers show how hospitality is ready to kickstart Britain’s post-COVID-19 economy, but without urgent and sustained government support there is a real danger that recovery will stall.”

Graeme Smith, AlixPartners’ managing director added,“It has been another tough few weeks for the hospitality industry, in particular with the loss of lucrative trade over the festive period due to trading restrictions, and significant challenges remain as the industry faces into inflationary cost headwinds and grapples with the exit from the remaining Coronavirus restrictions. The full cost of this for the industry will only become clear as the UK emerges from the pandemic, but with 8,000 fewer sites in the sector than March 2020, it is clear that the UK’s hospitality landscape has dramatically changed.

“There are, however, signs of light on the horizon, as the Government’s decision to reduce isolation times for those testing ‘positive’ suggests that we may see a further relaxation of restrictions in the coming months. Ultimately, when the sector has the oxygen of being allowed to trade without restrictions – as was the case in England between July and mid-December – demand is strong, providing hope for a sustainable recovery.”

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