Top hospitality CEO’s call on Chancellor to back the sector as ONS figures reveal dire impact of pandemic

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Over 160 CEOs from the UK’s leading hospitality businesses, employing hundreds of thousands of people, have written to the Chancellor ahead of next month’s Budget calling for decisive support to help the sector survive, rebuild and drive the economic recovery of the country as it emerges from the COVID crisis.

The letter, co-ordinated by trade body UKHospitality, ask for an extension of the 5% rate of VAT for hospitality for another year, expanded to the wider sector and the continuation of the business rates holiday for hospitality for the whole of 2021/22 giving businesses valuable breathing room to rebuild and address rent debt.

Additionally, the letter calls on the Government to provide a decisive package of fundamental support, including the extension of the furlough scheme, improved loan repayment terms to increase liquidity, deferral of Government-owed debt and replacement of the Job Retention Bonus.

UKHospitality Chief Executive Kate Nicholls said, “We are hopeful that, in the coming weeks and months, we can begin to welcome customers back and we know that people will be eager to socialise with their friends and families safely in our venues.

“That means we need to start laying the groundwork now. We need to make sure that the hospitality sector is in the best possible position to help rebuild as we done in the past. After the 2008 financial crisis, one in six new jobs created in the UK were in hospitality. If the Government backs our sector and gives us the support we need and deserve, we can play a key role in helping it achieve its aims of levelling-up people and communities across the country.

“Extending and expanding the cut in VAT will play a crucial role in boosting demand and customer confidence. Our sector is labour-intensive so this will instantly result in more jobs. Removing business rates will allow businesses to repair shattered balance sheets, including tackling the rent mountain that has now hit £2 billion.

“The support that the Government has provided in the past year has been crucial in keeping businesses alive, giving them breathing room and allowing them to keep jobs safe. That support must continue if we want to see as many businesses and jobs secure as possible, and hospitality play the key role we know it can play in rebuilding. There is no point in the Government undoing all the good work it has done in 2020 by pulling the rug from under us as we get back on our feet.”

Meanwhile today the Office of National Statistics released its latest analysis of the impact of Covid-19 on the industry and the figures are dire.

Turnover in travel and tourism businesses fell to its lowest level in 2020 in May, at just 26.0 per cent of February levels, compared with 73.6 per cent in all other industries.

  • Monthly air passenger arrivals to the UK fell from 6,804,900 in February 2020 to 112,300 in April 2020, a fall of 98.3%.
  • Greater London saw the largest fall in room occupancy of any English region from 2019 to 2020, with just 20% of rooms occupied in July 2020 compared with 90% in the same month in 2019.
  • Accommodation and travel agency businesses saw the sharpest decline in turnover during the first national lockdown, falling to 9.3% of their February levels in May 2020.
  • The proportion of businesses in travel and tourism industries trading peaked at 85% in October 2020, before declining in response to increasing restrictions in November.
  • In the three months to June 2020, employment in accommodation for visitors fell by 21.5% compared with the same three months of 2019.
  • In travel and tourism industries overall, the number of people aged 16 to 24 years saw the largest fall in employment of any age group between Quarter 3 (July to Sept) 2019 and Quarter 3 2020.
David Trunkfield hospitality and leisure leader at PwC says,  “The travel and tourism market has been decimated by COVID-19 and remains under immense pressure. While there was a brief resurgence in the summer of 2020, further lockdowns and travel restrictions have since hit demand. There remains uncertainty over the timing and profile of any recovery, given the need for restrictions to be lifted (both in the UK and internationally) and the virus to be contained to the extent that people feel comfortable to travel.

“The figures show a complete reversal of normal patterns in the industry, with London particularly impacted as people avoid city centres and levels of international tourist arrivals drop. By contrast, more remote areas such as the South West recovered relatively well during periods when restrictions were eased, benefiting from the staycation effect. We would expect to see similar trends during the course of 2021, though much will depend on how and when travel restrictions are eased, both within the UK and internationally.

“These significant impacts have had a knock-on impact on employment in the travel and tourism industry. We’ve seen larger declines in employment than other industries, particularly for the 25-34 age demographic, despite the high levels of furlough uptake by the industry. The current ongoing restrictions on travel create a significant risk that we will see further increases in unemployment in the industry as this year unfolds.”

https://www.ons.gov.uk/businessindustryandtrade/tourismindustry/articles/coronavirusandtheimpactontheuktravelandtourismindustry/2021-02-15

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