Bar and Clubs Hit Hardest By Pandemic
While hospitality has been “hit hard” by coronavirus, bars and clubs have fared the worst and consumer spending is below 70% of pre-pandemic levels, according to a report by The Office For National Statistics.
The report titled “Coronavirus and its impact on UK hospitality: January 2020 to June 2021” said the impact on hospitality had been “uneven” with bars and clubs being the biggest victims. It added consumer spending in hospitality started to increase in May 2021 but remains at less than 70% of pre-pandemic levels with a similar picture being seen in turnover – in May 2021, this remained one quarter lower than 2019 levels. It also found spending by businesses in the hospitality sector has seen smaller increases compared with consumer spending in May 2021, with payments to suppliers from food and drink businesses remaining about half of pre-pandemic levels. Confidence of business survival in the hospitality sector started to increase in May 2021 but remains below the all-sector level.
Meanwhile, job vacancies in the hospitality sector have seen large increases and are higher than pre-pandemic levels, however, in June 2021, the number of employees within the sector remained 11% below February 2020 levels. The report stated: “Hospitality (accommodation and food activities) has been one of the sectors most affected by lockdowns and government restrictions throughout the coronavirus pandemic. The sector may have also been affected by Brexit, but as the end of the transition period coincided with the start of the latest lockdown, it is hard to separate the effects of the two.” Data from HM Revenue and Customs showed that, in April 2020, just under 1,650,000 employees in the sector were on furlough as businesses paused trading, falling to just under 590,000 employees furloughed at the end of May 2021, which represented 25% of all furloughed employees.
As the hospitality sector adapted to the changing restrictions, the proportion of businesses temporarily closed fell from 81% in the spring 2020 lockdown to 54% in the early 2021 lockdown. Business turnover also reflected this change, showing higher revenue in early 2021 than in spring 2020. In May 2020, turnover was just over £1.2bn compared with £3.4bn in March 2021. This rose further to £6.9bn by May 2021 after restrictions were partially eased, the highest figure since August 2020. Although that was still about 25% lower than its 2019 level. This revival was particularly strong for the restaurant and mobile food service activities sub-sector where turnover in May 2021 was £3.3bn, five and a half times what it was in May 2020 – this was likely to be because more restaurants were able to provide takeaway services and outdoor dining was permitted.
Looking at the performance within hospitality, the report found pubs and nightclubs have been one of the worst affected sub-sectors; turnover in May 2021 was 39% lower than May 2019 and has consistently remained below 2019 levels since the pandemic began. In the case of pubs, this is likely a consequence of businesses being closed or disrupted for long stretches at a time. Pubs have been less able to offer a takeaway service when closed and have had partial restrictions, such as earlier closing times and substantial requirements around eating even when open. Nightclubs have remained closed by law since March 2020.
On the future of jobs in the sector, the report said: “Most economic indicators point to the start of a recovery for businesses in the hospitality sector, with the labour market showing similar trends. Since early April 2021, furlough rates in the hospitality sector have been declining. The furlough scheme has now started winding down, with the payment provided to employers reducing from 80% of employees’ wages, to 70% in July 2021, falling further to 60% in August. This may lead to further reductions in furloughed employees in the sector.” Data showed the total number of payrolled employees in the hospitality sector increased to over 1.8 million in June 2021, from a low of 1.7 million in March 2021. However, payrolled employees remain below a pre-coronavirus pandemic figure of more than two million in February 2020.
The report also stated: “Job vacancies in hospitality have rapidly increased throughout 2021 as businesses look to employ more staff to meet demand, with reports of businesses struggling to employ the staff needed in hospitality.” In the period April to June 2021 there were an estimated 102,000 job vacancies in hospitality, nearly five and a half times higher than the 19,000 recorded in December to February 2021, and higher than pre-pandemic levels. This increase may indicate the beginning of a temporarily tight labour market or bottleneck, where hospitality businesses are looking to increase employment but currently cannot recruit the numbers necessary.