45% revenue drop shows 'industry in peril'

By Rebecca Weller

- Last updated on GMT

Industry in peril: latest UKHospitality and CGA tracker showed sales were down (Credit: Getty/ sturti)
Industry in peril: latest UKHospitality and CGA tracker showed sales were down (Credit: Getty/ sturti)

Related tags Cga ukhospitality Coronavirus Finance

Full 12-month figures were nearly half what they were over the same period pre-pandemic, according to data from latest edition of the UKHospitality and CGA Quarterly Tracker.

The tracker showed a 45% drop in sales for the 12 months to end-September 2021 compared to year to end-September 2019, with annual sales £60bn below 2019’s £132bn annual turnover and described the hospitality sector as ‘an industry in peril’.

However, since the removal of restrictions the sector has showed signs that given the right support, it could return to strength and drive economic growth and job creation.

This year’s Q3 sales, for example, indicate a 73% growth rate compared to the same quarter in 2020, which reflects the benefit of removing restrictions.

UKHospitality chief executive Kate Nicholls said: “While things are certainly moving in the right direction, recovery remains painfully slow and there are massive gaps between the numbers now and where they were before Coronavirus wreaked its havoc.

“Ours is an industry in peril, and this latest data reflects a sector fighting on all fronts for survival.

Nightclubs worst affected

“Since trading restrictions were lifted, operators have been plagued with a labour crisis and supply chain issues, not to mention soaring inflationary costs.

“In addition, VAT has risen and the cap on business rates, announced in the last budget, penalises the most successful businesses in the sector as it means no business can claim more than £110,000, this means even smaller operators, with just three or four sites, will miss out on relief.”

According to the ‘CGA & AlixPartners Market Recovery Monitor​’, which tracks venue openings and closures, between March 2020 and September 2021, the licensed market lost 9,900 sites (net closures, including openings and closures), equivalent to a loss of 8.6% of venues with nightclubs and guest houses among the worst affected

UKHospitality, which represents over 730 companies operating around 85,000 venues in a sector that employed 3.2m people prior to Covid, estimated the sector has lost almost 700,000 jobs since March 2020 and is currently seeing 10% vacancy rates, which represents a shortage of around 200,000 staff across the UK.

Sector in need of government support

Hospitality represents 10% of UK employment, 6% of businesses and 5% of GDP and is the 3rd largest private sector employer in the UK, double the size of financial services and bigger than automotive, pharmaceuticals and aerospace combined.

Nicholls added: “Given all the above, the Government must look at implementing measures to support the industry.

“The most effective of these would be to rethink the cap on business rates relief and maintain the current lower 12.5% of VAT for the sector after April next year when it is set to return to 20%.

“If this support isn’t put in place sooner rather than later, then consumers will find themselves paying higher prices, hundreds of hospitality businesses will collapse and thousands of jobs will be lost.”

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