In an attempt to mitigate festive losses, the Government has announced that businesses in England most impacted by Omicron will be able to access financial support, with £700 million being delivered to councils last Friday (7 January 2022). This news follows the Chancellor’s announcement before Christmas where he pledged £1 billion in overall support.
The Government’s press release has confirmed that “businesses eligible for grants are those that offer in-person services, where the main service and activity takes place in a fixed rate-paying premises, in the hospitality, leisure and accommodation sectors.” Companies operating in these sectors will be able to apply for one-off grants of up to £6,000 per premises depending on rateable value, while there is also some assistance with staff sickness payments.
While the headline amounts sound significant, this level of support is likely to be insufficient to cover the shortfall from revenues normally seen by businesses in these sectors over the festive period. According to figures from industry body UKHospitality, restaurants, bars and pubs lost on average £10,355 in the week leading up to Christmas alone, with overall December sales down nearly 50% on 2019 levels, and Christmas Day takings down 60% on 2019 levels. Office closures, the cancellation of pre-Christmas bookings on the back of rising Covid cases and diminishing consumer confidence were key drivers of these losses.
UKHospitality CEO, Kate Nicholls, was quoted as saying: “With December usually equal to three months’ worth of trading income, this pushes back recovery by at least the same amount of time – and not just for the sector but for the whole country, as the latest ONS figures show growth in Q3 was driven by hospitality.”
In a survey carried out for the Tourism Alliance prior to the Government’s support announcement, data showed that “a third of pubs, bars and restaurants have no cash reserves and 10% of pubs and 14% of restaurants are therefore very likely to fail”. The same survey estimated that “without any form of Government support a further 40% are at risk of failure. Accommodation businesses are only slightly more resilient with 22% reporting no cash reserves – 47% with less than 2 months’ worth – with 26% at risk of failure in the next year without further support.”
It appears £6,000 per premises will fall some way short of replacing the takings many businesses might expect to get in one day alone during the festive period and therefore, many are likely to be at risk of failure. Understandably, some business owners are unimpressed by the Chancellor’s support package, which appears to have used big headline numbers to mask limited on the ground financial support. Although, the funding will provide some much-needed cash flow to struggling businesses.
With no new Covid restrictions imminent in England at least, many businesses in the hospitality leisure and accommodation spaces may be cautiously optimistic about the year ahead. That being said, volatility and low footfall is likely to continue for town centre operators whose business are most affected by work from home restrictions. Whether the Government’s support will be enough to prevent at-risk businesses from failing, remains to be seen, but it could be a long winter for many.
If you would like to know more about the support available to your business, please contact David Gregory or Ingrid Saffin, or click here to learn more.
This is a generous package building on existing hospitality support measures to provide an immediate emergency cash injection for those businesses who, through no fault of their own, have seen their most valuable trading period annihilated - Kate Nicholls, CEO of trade body UKHospitality