Hospitality firms are ramping up calls for support from the Government as the spread of Omicron and health warnings wreak havoc on hard-hit pubs and restaurants.
UKHospitality boss Kate Nicholls and pub chiefs have made a plea for business rates relief and VAT discounts to be extended, warning that the sector has been knocked harder than expected by the new restrictions.
She said hospitality sales have already plunged by more than a third over the last 10 days with £2 billion of trade already lost in December.
If operators are unable to trade profitably over the next month, many will simply not survive.Kate Nicholls, UKHospitality chief executive
It comes as the CBI also urged the Government to provide support “in lockstep with future restrictions”.
The rapid rise in Covid-19 cases as the Omicron variant sweeps the country has led to a surge in booking cancellations.
Consumer confidence has been knocked by new restrictions and increasing health warnings.
England’s chief medical officer Professor Chris Whitty has advised Britons to consider cutting back socialising around Christmas, while Prime Minister Boris Johnson said people should “think carefully” before going out to celebrate.
Ms Nicholls said: “Christmas trade is always crucial for the hospitality industry, making up as much as a quarter of the year’s profit for many businesses.
“Last year, Christmas was cancelled and so much rested on this December period for businesses already staggering under a burden of debt incurred from the pandemic and facing rising costs across the board.
“If operators are unable to trade profitably over the next month, many will simply not survive – and those that do make it through face a return to 20% VAT in April.
“The Government must step in now and provide measures that support the businesses and jobs in the sector – by committing to keeping VAT at 12.5%, suspending business rates payments for the first quarter of 2022 and reinstating recovery grants.”
Too many businesses will shut for ever and people will be laid off with no means of income to look after their families. All this will happen very fast. Many will be at risk of losing their home too as a result. This is awful. Support and clarity must be provided urgently.— Fred Sirieix (@fredsirieix1) December 16, 2021
The boss of Greene King, one of the UK’s biggest pub groups, said some its London pubs have seen sales down as much as 70% compared with the same week in 2019 amid a wave of cancellations.
Chief executive Nick Mackenzie said: “The guidance from Government to limit social interactions and shift to working from home has put our industry into lockdown in everything but name.
“As consumer confidence plummets and booking cancellations rise, we urgently need Government to act to support the industry now by freezing business rates and removing the existing cap, confirming a longer term reduction in VAT and providing targeted support for those most severely affected by the current situation.
“This will help to continue to preserve livelihoods and jobs in our sector.”
The boss of pub group Young’s has called for Chancellor Rishi Sunak to “show up” and re-introduce a lower rate of VAT and business rates holidays.
Patrick Dardis, chief executive of the 220-strong group, told the PA news agency: “I have no idea where Rishi Sunak is right now but he needs to show up and give the industry his backing.
“There are thousands of businesses – not just pubs – that could collapse in January if the current situation isn’t partnered with proper financial support.
“We have given up on this being the fantastic Christmas we had hoped, but will obviously continue to do our all for all the customers still with bookings.
“We have seen similar to everyone else. We saw 30%-plus cancellations last week and that’s looking higher this week and next week.
“The industry have spoken with BEIS (Department for Business) in recent days but what we have heard has not been very encouraging to be honest, so hopefully things will change soon.”
Firms across the sector are asking for an extension of the discounted 12.5% VAT, which is due to revert back to the original 20% rate in March next year, with UKHospitality also pushing for a deferral of business rates.
She said the group was working with the Treasury and across government to help ensure support is maintained for the sector.
Earlier this week, the International Monetary Fund said Chancellor Rishi Sunak should be “ready to deploy” a mini form of furlough support in the event of widespread closures to help sectors suffering the most, such as hospitality.
Rain Newton-Smith, CBI chief economist, added: “Further support for struggling firms will be needed if fresh government public health measures prevent firms trading their way to recovery.
“Cash is king, so helping affected firms with cashflow, by ensuring unspent local authority grants are distributed to firms, giving firms more headroom to manage their coronavirus debt repayments and considering measures to reduce the fixed costs of businesses where demand is severely affected should be on the table.”
Michelin-starred chef Tom Kerridge has highlighted the suffering in the sector when he revealed one of his restaurants has seen more than 650 cancellations in the past six days due to Omicron fears.
The chief executive of pub and brewery Shepherd Neame said his business had been thrown into a “zombie world” by current concerns and government messaging.
Jonathan Neame told Times Radio: “We’ve seen a significant number of cancellations and that’s accelerating every day, and will accelerate even further after the news last night, which seems to have thrown us back into that sort of zombie world of the first week of March, of the pandemic last year.”
Dominic Paul, chief executive of takeaway chain Domino’s Pizza, said parts of the hospitality industry “are going to have a really tough few months”.
He added: “The Government showed a real willingness to support the industry before and I think they probably will again.”