The findings, from this second survey of members of all three trade associations conducted by hospitality market research company CGA, paint a catastrophic picture, as the new 3 Tier system comes into force and has been extended to London, York and other areas, with further announcements expected imminently.
More than three quarters (76%) of businesses were loss making and, worryingly, the grave outlook revealed by the survey reflects views largely canvassed before the full impacts of the tier system were announced, and so are likely to be an under-estimation of the acute difficulties of the sector’s immediate prospects, unless new Government support is forthcoming.
With furlough ending in just over 2 weeks, and the Job Support Scheme not viable for most hospitality businesses that have seen their cash flows decimated since restrictions have increased, the survey shows that by February 2021, over 750,000 jobs will be lost against employment figures from February 2020 without further Government support.
Nearly 50% of respondents believe that the restrictions in place will reduce their turnover by at least half this winter. The prediction for total business failure by the end of 2020 is now estimated to be more than 1 in 4. Over 50% of businesses are now expected to fail before the end of Q1 in 2021.
Businesses in the Medium and High Risk tiers announced by the Prime Minister earlier this week are in no man’s land, the trade bodies say. Without the benefit of furlough and government disruption grants, they will be under pressure to trade with an impossibly low level of custom, forcing them to make large sections of their staff redundant and to close their doors, potentially forever.
The trade bodies now urge Government to urgently rethink the support offered to hospitality businesses across all 3 tiers, to avoid unprecedented levels of unemployment and business failure across the sector.
They say there must be an immediate, sector-specific extension of the Jobs Support Scheme with no employer contribution until restrictions are lifted for all tiers; Government Disruption Grants should be made available for all venues, across all tiers; and a review of any restrictions placed on venues must take place at least every 2 weeks.
Safeguarding hospitality venues against business failure is the priority and without these measures in place, the hospitality sector, they say, will not survive to provide the employment and tax revenue that will be needed for a safe and sustainable recovery in 2021 and beyond. The most secure route to a swift recovery is to ensure that businesses survive this winter.
A joint spokesperson for the trade bodies, said:
There can be no doubt of the devastating impact that the Government’s restrictions are having on hospitality and pub businesses across the UK.
Without urgent sector-specific support for our industry, massive business failure is imminent and hundreds of thousands of jobs will be lost around Christmas from a sector that was in growth at the beginning of this year, as well as in the supply chain that supports them.
While there are any restrictions placed on hospitality and pubs, there must be financial support in place across all tiers of risk.”
Originally published by UKHospitality