According to UKHospitality, the sector saw a severe drop in footfall over the course of last week, dropping 30% in key areas of central London and other metropolitan areas.
UKHospitality chief executive Nicholls explained on BBC Radio 4 Today program: “It's as if somebody flipped a switch last week.
“As soon as we had the Government announcement of the action plan and the measures that they might take in the event of a crisis of the epidemic spreading, we saw a lot of businesses putting in place travel bans, meeting bans and meeting restrictions, and a lot of businesses encouraging people to work from home.”
Critical pinch point
As a result, the sector has seen events, businesses conferences and hotel bookings coming up in the next two to three weeks drop by 50%.
But Nicholls outlined local pubs could be less impacted.
She said: “There is a willingness to go to your local where you live, especially if you’re working from home, but not necessarily a willingness to come into the city centre, and the town centre.”
Nicholls also explained the sector has more headwinds to overcome by the start of April.
She said: “What we’ve got is critical pinch point coming on 1 April – that's when lots of businesses face bills for VAT, PAYE and they have their quarter rent days coming up so there’s a real cash flow crisis.
“This is very short, tight cash flow crisis and these are good businesses that would otherwise survive.”
She continued: “So, what we’re saying to the Treasury is: give us time to pay and give us breathing space until we get through this crisis because this is a huge part of the UK economy.
“It is the third largest business sector in the UK and unless we have that, we will have business failures.”
In the Government’s recent action plan, it states for businesses facing short-term cash flow issues (for example, as the result of subdued demand), an effective mitigation already exists in HMRC’s Time To Pay system.
This is offered on a case-by-case basis if a firm or individual contacts HMRC about falling behind on their tax.