Market Recovery Monitor – hourly hospitality closures highlight the importance of this week’s budget for the hospitality sector

A year on from the start of the COVID-19 pandemic, our latest edition of the Market Recovery Monitor has shown that the seismic impact on the hospitality sector has continued into early 2021. In January 2021 alone we have seen a permanent net closure figure of 1,749 – a stark figure when compared with the 5,975 recorded in the whole of 2020.

In the past 13 months (since the end of December 2020), there has been an average of nearly three permanent closures for every new opening, and an average closure rate of 30 sites per day – more than one an hour. It is clear that restrictions on trading in December 2020 dealt a final blow to many businesses.

While the Prime Minister last week in his address stated the country was on a one-way road to freedom, the hospitality sector still faces many weeks of subjugation. Businesses have spent almost an entire year closed or operating under the most severe restrictions, and the Government’s roadmap to reopening does very little to ease their pain.

Our data reveals that just 43% of the c.26,000 licensed premises in England have outdoor areas available to take advantage of April’s potential relaxation of restrictions and resumption of outdoor-only service. While permitting businesses to trade outdoors from this point will clearly benefit some segments of the market more than others, even for those operators with outdoor space it is unlikely to be a viable option in generating sufficient sales to justify reopening.

For many businesses, it will not be until mid-June, when restrictions are more fully lifted, that they will be able to trade on a profitable basis. With indoor eating and drinking not returning until mid-May at the earliest, sadly we can expect to see closures climb even higher.

The rapid acceleration in site closures since the start of the year demonstrates just how brutal the situation is. Businesses are burning through cash at an alarming rate as costs stack up, and within the sector there is despair as to why hospitality is at the back of the queue when it comes to reopening. The Budget is absolutely crucial to the future survival of thousands of sector businesses; a substantial package of financial support is needed to prevent greater numbers of closures across this year and beyond.

 However, it is clear that there is huge pent-up demand for hospitality among consumers. If the rollout of the COVID vaccine and associated reopening roadmap progress as smoothly as hoped, the industry is cautiously optimistic that trading will approach pre-pandemic levels during the second half of 2021. Until then, it remains a question of whether businesses can secure enough support to sustain themselves through to happier times.