Hospitality Industry May Take the Legal Route on Lockdown Restrictions

Hospitality Industry May Take the Legal Route on Lockdown Restrictions

Summary

  • The hospitality businesses are on the verge of collapse due to the government’s restrictions.
  • British Prime Minister Boris Johnson will be imposing a three-tier strategy of further restrictions on parts of England
  • The Night Time Industries Association has said that the industry will be taking legal action if the Government imposes further restrictions
  • The hospitality and leisure stocks have not been performing well and incurring losses, due to different measures and restrictions imposed by the government

The rapid acceleration in the number of coronavirus cases has forced the British Prime Minister Boris Johnson to impose a three-tier strategy of further restrictions on parts of England. This is being done to curtail the spread of the disease.

Mr Johnson is supposed to hold a meeting of the government’s emergency COBRA committee later on 12 October 2020 and address the parliament. He will also be interacting with England’s Chief Medical Officer and Finance Minister in a press conference subsequently.

Reports suggest that the number of cases existing in a particular region will be the deciding factor for them to be distinguished into different categories.

  • Population having less than 100 cases per 100,000 persons will belong to the Tier-1 category with minimum restrictions. Businesses permitted by law to function can remain operational, providing they meet Covid-19 secure guidance.
  • Population exceeding 100 cases per 100,000 persons will belong to the Tier-2 category with additional restrictions. Businesses permitted by law to function can remain operational, but the additional restrictions could extend to the hospitality and retail sector as well.
  • Population with the greatest number of cases will belong to the Tier-3 category with severe restrictions. Businesses like the hospitality and leisure sectors would be completely under shut down.

The closure of bars, restaurants, casinos in areas categorised under the “very high” alert level, probably across the north of England, has agitated the owners of the hospitality businesses. The restrictions imposed in early spring have already devastated the businesses resulting in incurring huge losses.

On 11 October 2020, the Night Time Industries Association (NTIA), a trade body of UK, has reportedly told that in order to prevent lockdown measures from being imposed, the industry will be taking legal action. CEO of NTIA, Michael Kill has reportedly told the industry is left with only option going legal against the government on the implementation of further restrictions across the north of England. He also added that the new measures would have a catastrophic impact on late-night businesses, and the insufficient financial support package is already worsening the situation.

Amid all this wrangling, let us have our lens over some prominent hospitality sector stocks-

Hospitality Sector Stocks Under Focus

 

Wetherspoon (JD) PLC (LON: JDW) stocks were trading at GBX 960.50 on 12 October 2020 at 3:46 PM, down by 0.26 per cent from its previous close of GBX 963.00. The 52-week low/high price was reported to be GBX 559.50/1,734.00. It had a market capitalisation (Mcap) of £1,159.26 million. The company recorded a negative return on price, which was 42.61 per cent on YTD (Year to Date) basis.

Marston’s PLC (LON: MARS) stocks were trading at GBX 47.60 on 12 October 2020 at 3:48 PM, down by 4.99 per cent from its previous close of GBX 50.10. The 52-week low/high price was reported to be GBX 22.20/131.40. It had a market capitalisation (Mcap) of £317.66 million. The company recorded a negative return on price, which was 61.34 per cent on YTD (Year to Date) basis.

Mitchells & Butler’s PLC (LON: MAB) stocks were trading at GBX 143.40 on 12 October 2020 at 3:53 PM, down by 2.71 per cent from its previous close of GBX 147.40. The 52-week low/high price was reported to be GBX 100.80/470.50. It had a market capitalisation (Mcap) of £632.64 million. The company recorded a negative return on price, which was 67.71 per cent on YTD (Year to Date) basis.

Young & Co’s Brewery PLC (LON: YNGA) stocks were trading at GBX 812.00 on 12 October 2020 at 3:55 PM, down by 2.17 per cent from its previous close of GBX 830.00. The 52-week low/high price was reported to be GBX 814.00/1,690.00. It had a market capitalisation (Mcap) of £285.44 million. The company recorded a negative return on price, which was 49.00 per cent on YTD (Year to Date) basis.

 

Need for Additional Measures

 

On 11 October 2020, the United Kingdom recorded 12,872 new cases, making the total positive cases reach the 0.6 million mark. The total deaths officially registered were 42,825. The region to be particularly hard hit by a new surge in the number of cases was Northern England, forcing local lockdown.

The Culture Secretary Oliver Dowden said that an academic research conducted proved that the risk of transmission of the deadly virus was higher in hospitality settings such as bars and restaurants. He also expressed that the restriction measures would prove to be beneficial in getting the virus under control by Christmas.

Conclusion

Though Boris Johnson has been under pressure from parts of his Conservative Party over some Covid-19 measures, but it is very important to take the right step at the right time. The repeated lockdown restriction poses a threat to various businesses, impacting the economy negatively and becomes very challenging for people. But it will ultimately be a better decision to restrict the virus from getting out of control.

 

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