Data reveals ‘devastating’ impact of pandemic

Consumer spending on hospitality started to increase in May 2021, but remains at less than 70% of pre-pandemic levels, according to Office for National Statistics (ONS) data.

A similar picture is seen in the turnover of the sector, which in May remained one-quarter lower than 2019 levels.

Spending by businesses in the hospitality sector has seen smaller increases compared with consumer spending in May 2021, with payments to suppliers from food and drink businesses remaining around half of pre-pandemic levels.

The confidence of business survival in the sector started to increase in May 2021, but remains below the all-sector level.

Meanwhile job vacancies have seen large increases and are higher than pre-pandemic levels, however in June 2021, the number of employees within the sector remained 11% below February 2020 levels.

In May 2020, turnover of the sector, which includes accommodation, was just over £1.2bn, compared with £3.4bn in March 2021.

This rose further to £6.9 billion by May 2021 after restrictions were partially eased, the highest figure since August 2020 – although this is still around 25% lower than its 2019 level.

This revival was particularly strong for the restaurant and mobile food service activities sub-sector, where turnover in May 2021 was £3.3bn, five and a half times what it was in May 2020, as more restaurants provided takeaway and outdoor dining permitted.

Pubs and nightclub turnover in May 2021 was 39% lower than May 2019 and has consistently remained below 2019 levels since the pandemic began.

In the case of pubs, this is a consequence of businesses being closed or disrupted for long stretches at a time.

Pubs have been less able to offer a takeaway service when closed and have had partial restrictions, such as earlier closing times and substantial requirements around eating even when open.

Nightclubs have remained closed by law since March 2020.

Unlicensed restaurants, cafés and takeaways fared better, with 17% of these businesses reporting profit losses of 20% or more in June 2021, with lighter restrictions on trading.

In terms of employment, the total number of payrolled employees in the hospitality sector increased to over 1.8m in June 2021, from a low of 1.7m in March 2021.

However, payrolled employee numbers still remain below a pre-coronavirus pandemic figure of more than 2m in February 2020.

In terms of business confidence, in early June 2021, only 14% of pubs and bars and only 15% of licensed restaurants reported that they had “high” confidence that they would survive the next three months.

This is much lower than the 47% of businesses from all other sectors that had “high” confidence of survival in early June 2021, and lower than levels reported in April 2021.

Commenting on the figures, Kate Nicholls, CEO of UKHospitality said the figures highlighted the “devastating consequences” for businesses in the sector.

She said: “While ‘Freedom Day’ sees 12,000 venues finally open their doors and the sector operate viably for the first time in 16 months, hospitality is far from out of the woods.

“For the sector to enjoy a sustainable recovery, government will need to continue working closely with us in order to put in place the right trading environment including measures such as the extension of the business rates holiday until at least October, allowing firms to bounce back strongly, and to rebuild fragile consumer confidence. With the right support, hospitality can be at the forefront of the nation’s economic recovery, creating jobs and reviving our high streets and city centres.”