‘Bleak outlook’ from operators looking to bounce back in second half of 2020

22-Jun-2020 - Last updated on 22-Jun-2020 at 09:41 GMT

Low expectations: 'with trade forecast to be materially down for many months to come, the Government must consider targeted support,' UKH's Kate Nicholls explained

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While a survey by UKHospitality (UKH) found that pubs were the hospitality industry’s most optimistic sub-sector ahead of the resumption of trade in July, the overall picture suggests a long and painful recovery from Covid-19.

Responses from UKH members representing more than 20,000 venues and employing 332,000 people paint a gloomy picture of low post-lockdown trading expectations for businesses which have been closed for more than 100 days due to the Covid-19 pandemic.

Although it has been widely reported that Prime Minister Boris Johnson will slash the two-metre social distancing measure in half this week, the general consensus from hospitality operators quizzed by UKH is that trading levels will fail to reach 50% of last year’s figures during the first three months post-lockdown regardless.

The industry body’s survey found that businesses expect to achieve 35% of last year’s trade in July under one-metre social distancing, rising to 43% in August and 50% in September. These respective estimates fall to 22%, 28% and 32% under a two-metre distancing rule.

What’s more, during the crucial Christmas trading period, respondents estimate that they’ll see just 55% of last year’s seasonal trading under one-metre distancing.

‘Bleak outlook’

UKH’s survey results were revealed as the sector body calls upon Westminster to urgently confirm 4 July as the date for hospitality businesses to reopen.

What’s more, it is calling for renewed commitments on extended support for the sector – the UK’s third largest employer which generates £39bn of tax for the Exchequer - in order to prevent widespread business failure and further job losses.

Commenting on the survey results, UKHospitality’s chief executive Kate Nicholls said that the “bleak outlook” from operators should sound the alarm with Governments across the UK.

“First things first, we urgently need confirmation of the reopening date for hospitality without further delay,” she explained. “Businesses need time to prepare and the first step on the road to recovery is confirmation of when they can open their doors again. Those who rely on advance bookings, such as hotels, leisure parks and attractions need answers now.

“For most venues, operating with the two-metre social distancing rule is financially unviable, so if the current review on social distancing recommends it is safe to do so, we would urge the Government to adopt the internationally-recognised standard of one metre. Such a reduction would be a huge boost for the sector and prove critical to the survival of the vast majority of businesses.

“With trade forecast to be materially down for many months to come, the Government must consider targeted support to help assist the sector’s recovery, such as a cut in tourism VAT and Air Passenger Duty, support for missed rent payments during closure and the creation of an autumn Bank Holiday.”

Pubs most optimistic

Of the different sub-sectors within the hospitality industry, pubs appear to be the most positive about a July restart – irrespective of one or two metre social distancing – though they still don’t envisage figures to reach 50% of last year’s trading for many months.

Pub operators quizzed by UKH stated that they expect, on average, July trading to make up 37% of last year’s figure if a one-metre rule is enforced – ahead of sub-sectors such as restaurants (32%), hotels (25%), late night venues (28%) and coffee shops (35%).

While this figure falls to 23% under a two-metre rule, it is still the highest of any of the industry’s sub-sectors.

In terms of August and September trade, pub operators expect respective figures to fall by 56% and 52% year-on-year under one-metre distancing, which sees pubs, again, the most optimistic sub sector for August but fall behind contract catering businesses in September.

When it comes to seasonal trading, pubs are anticipating a 48% drop in year-on-year trading if they’re allowed to trade at one-metre social distancing – or a 71% drop under two-metres – once again placing them among the sector’s most optimistic sub sectors.