The outlook for UK-listed hospitality companies remains challenging despite a decline in profit warnings of 90% during the first three months of 2021, according to the latest analysis by EY-Parthenon.

It found that UK-listed hospitality, leisure and travel companies issued significantly fewer warnings in the first quarter of this year, compared to the equivalent period in 2020, with only five profit warnings issued, by 8% of the sector, compared to 50 issued in Q1 2020.

Commenting on the numbers, Christian Mole, head of hospitality and leisure at EY UK & Ireland, said: “The hospitality sector has clearly been one of the most affected by restrictions on social contact, with almost four in five UK FTSE Travel and Leisure companies having issued a profit warning since the start of 2020.

“But restrictions are easing, and the economic outlook is improving. Consumers have responded to outdoor hospitality very positively, demonstrating that there is significant pent-up consumer demand.”

However he said the reopening of indoor dining on the 17 May would likely prove a bigger test of the balance between supply and demand.

“Hospitality operators need to recognise where there has been a permanent shift in consumer preferences and be ready to accommodate these changes. This may require action on staffing levels and on choosing which sites to preserve,” he added.

As companies face the end of government support, and with the rent moratorium due to end in June, there are further challenges ahead, he said. 

“We’ve reached a crossroads in this pandemic. While there is still breathing space provided by government support, companies need to take the opportunity to understand where and how they need to reshape their operations in order to put their businesses on a firm financial footing.”