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UK hospitality and retail facing 'economic long COVID'

·3-min read
Despite the tough year for hospitality, the reopening of outdoor dining was a bright spot in the easing of restrictions. Photo by Vuk Valcic/SOPA/Sipa USA/PA
Despite the tough year for hospitality, the reopening of outdoor dining was a bright spot in the easing of restrictions. Photo by Vuk Valcic/SOPA/Sipa USA/PA

UK business chiefs made a fresh plea for government action on rent debts and hardship caused by COVID-19 shutdowns on Monday afternoon in London. 

Kate Nicholls, chief executive at UK Hospitality said at a Treasury select committee hearing on the economic impact of the pandemic that the hospitality sector is facing "economic long COVID" as a result of the hefty debt burdens businesses have been left with. 

Helen Dickinson, chief executive of the British Retail Consortium (BRC), Nicholls and Mark Tanzer, chief executive at ABTA – the Travel Association stressed their concerns about tapered support and uncertainty around reopening.

“It's fair to say that the measures put in place have not always been sufficient to weather a sustained hit on revenue,” said Nicholls, noting that average hospitality monthly costs are between £10,000 and £20,000, while the average government support was £3,000 per month. 

Watch: What UK government COVID-19 support is available?

She said that borrowings by hospitality are twice the levels of deposits and that very few businesses had been granted extensions on repayments by commercial banks.

The hospitality sector has been among the hardest hit by the pandemic, with much of it shut down for the best part of the last 15 months. Alongside this, non-essential retailers have struggled with rent payments and continued confusion on whether moratoriums would be extended. 

Tanzer also said he feared "losing a generation" of travel companies, amid continued stress on the sector. He noted that the UK's vaccination rates should mean the sector is able to reopen at faster rate and recommended a change to testing regimes for holidays. 

Retail boss Dickinson also noted that the shift to online has been a sea-change for shoppers and retailers and that clarity of messaging on encouraging people back into cities and onto high streets would be crucial for recovery. 

Read more: G7 global tech tax deal: Why Amazon may still end up paying less tax

The evidence comes following new data released over the weekend that showed the reopening of indoor hospitality has failed to reignite footfall returning to town centres, as customers frustration with queuing, QR codes and basic menus grows.

The gap between footfall in May 2021 and the same time period in 2019 widened from 25.3% to 26.8% as the month went on.

This means while footfall increased after the reopening of non-essential retail in April, the much-anticipated return to hospitality has struggled to make the same impact.

One potential reason for this is a reduction in casual walk-in guests, in conjunction with KPMG analysis that has suggested that the culture of browsing around shops and town centres has reduced.

While sales at indoor hospitality venues rose in the first week of reopening, footfall in town centres decreased as they fail to entice consumers who are still reluctant to return.

Watch: What is inflation and why is it important?

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