The run up to Christmas is normally a merry time for the hospitality industry. Our nation’s restaurants, pubs and bars are usually bursting at the seams. Most people are out celebrating with their family, friends and colleagues – with crackers being pulled, pigs in blankets served and a glass or two of mulled wine drunk under the mistletoe.
Yet, the exact opposite is happening right now for the hospitality industry in the UK. Instead it’s the nightmare before Christmas. Ever since people in Britain have been told to work from home by the government and told to cut back on socialising by chief medical officer Chris Whitty, pubs and restaurants have been clobbered. Corporate parties have been completely cancelled, restaurant reservations have fallen off a cliff and after work drinks in the pubs have dried up.
The fact that Christmas was cancelled for most people last year means nobody is taking any chances this time – people are clearing out their social diaries and deciding to hunker down at home early to save Christmas. This essentially means nobody is going out.
A central London five-star hotel told me they’ve lost £2 million in corporate bookings this festive season, while other restaurateurs have been reporting mass cancellations across the board. Previously full restaurants now look like ghost towns.
The chef Tom Kerridge pointed out on social media on Wednesday night that he had 654 guests cancel in the space of six days at one of his restaurants. These kinds of cancellations are financially crippling for an industry which has barely recovered from its brutal treatment since March 2020. It’s gotten to the stage where we’re now starting to see restaurants deciding to close their doors for the rest of year with demand having all but disappeared and with more and more staff catching Covid.
From a financial point of view, the six-weeks or so before Christmas can see hospitality venues make up to 30 per cent of their takings for the year. Not only is it the time to make some money in an industry that notoriously runs on very tight margins, it’s the period which helps keep pubs and restaurants alive in the leaner months of January, February and March.
The hospitality industry has generally been fully supportive of public health measures – and businesses have worked hard to accommodate a tremendous range of Covid rules and regulations since the pandemic began. As an industry which looks after people for a living, restaurants understand the importance of public health and that people have to feel safe. We’ve also all seen the mistakes made before around lockdowns, testing and track and trace. But the industry has once again found itself in a complete no-man’s land with the government essentially telling people to stay away from social events, while offering no financial support to the businesses affected. It’s easy to wonder if any other industry would be treated in the same way.
The messaging from No. 10 has clearly impacted people’s willingness to socialise in public and as soon as that happens, it destroys trade and it destroys people’s lives. Yet, just like in March 2020, we have not been mandated to close by the government (which would mean they would have to financially support us) and people are being encouraged not to go out. It’s the perfect storm for bankruptcies and closures.
The industry is now holding its breath to see if the Treasury finally steps up to the plate and offers some financial support over Christmas. This week the Chancellor Rishi Sunak has reportedly been holding meetings with large hospitality businesses to discuss some financial support, but so far nothing has been confirmed.
It’s not viable for industries like ours – along with theatres, tourism and airlines – to have to operate like this. If every time a new variant appears and creates this dynamic, where people are told how to behave, swathes of the economy will simply become impossible to invest in.
It’s also going to make recruitment even more difficult for restaurants and bars. The situation was already on a knife edge. With the industry constantly on the verge of being closed by another Covid strain, I can see why many people would not choose to begin a career in hospitality.
Looking beyond Christmas, the focus point for many businesses now is spring. On 31 March the reduced level of VAT (currently at 12.5 per cent for hospitality after being lowered during the pandemic) is due to return to the normal level of 20 per cent. The Treasury’s business rates relief also comes to an end in March as does the rent moratorium. If no action is taken by the government soon, businesses which have been hit hard over Christmas will be facing another cliff-edge.
The hospitality industry is resilient. We’ve weathered many a storm over the years, but 21 months on from the beginning of this pandemic, I fear we’re on the cusp of a lot of business owners hanging up their aprons, turning off the ovens for the last time and switching off the lights – because there’s only so much we can take.
The government is playing Russian roulette with the third largest private sector employer in the country. They need to act now.
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