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Hospitality Businesses ‘Still Fighting for Survival’ After Reopening

By Jon Munnery
1 September 2021

Thousands of businesses in the hospitality sector are still fighting for survival despite the UK economy having reopened and Covid-related restrictions on their activities having largely been lifted.

According to the trade body UKHospitality, customers returned to pubs, bars, restaurants and cafes more quickly after relevant restrictions were lifted in 2021 than was the case in 2020.

However, it is clear from recent research that thousands of hospitality businesses are still struggling to avoid insolvency or liquidation and the sector as a whole continues to face significant challenges.

Indeed, UKHospitality has described the industry as being in a “fragile” state, despite there having been a huge increase in the number of people visiting hospitality venues since they fully reopened on ‘freedom day’ back in July.

According to the trade body’s figures, around 56 per cent of consumers across the country visited a hospitality venue in the 10 days after they were first allowed to do so this year, which is a 21 per cent increase compared to the 10 days after lockdown ended in summer 2020.

A major problem that hospitality sector businesses are understood to be facing currently is a significant shortage of staff to fill the job vacancies they have available.

UKHospitality wants to see the government providing much greater support for its embattled sector through a variety of targeted policy measures.

“Hospitality venues are struggling to return to pre-pandemic levels of revenue with staff shortages hindering their recovery,” explained Kate Nicholls, the chief executive of UKHospitality.

“In order to rebuild, the sector needs the government to put in place a supportive landscape which includes an extension of the business rates holiday until at least October and a permanently lower rate of VAT for the sector.”

In recent quarters, the government’s furlough scheme has been covering the costs of wages for many thousands of companies across the UK but that initiative is due to close at the end of September.

The insolvency and restructuring trade body R3 has urged company directors to use the final weeks during which the furlough scheme is still open to carefully consider their financial options going forward and to speak to experts if they need support in making plans for the future.

Jonathan Munnery
Partner
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