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Highlights
- Hospitality sector is set to face 3 upcoming challenges from April 2022, as government is expected to withdraw its VAT support, the rent moratorium will come to an end and as higher staff wages will weigh on businesses
- Several industry bosses cautioned these challenges will further add to the sector’s current pressures
The hospitality sector has been among one of the most affected sectors in the UK, by the pandemic.
The sector is now expected to face several new challenges from April next year, which include the government support for VAT coming to an end, the ending of the current rent moratorium and the increase of staff wages from 2022.
Several industry bosses have warned the upcoming headwinds would further add to various pressures the industry is already battling with, as it slowly recovers from the pandemic, according to an Evening Standard report.
The above headwinds will be in addition to the current challenges facing the sector such as, issues with staff recruitment, bottlenecks caused by the ongoing supply chain crisis and others.
Head of the Restaurant Group (LON:RTN), Andy Hornby, told a hospitality site Propel, that he was very lucky as the group has already undergone refinancing. However, Hornby added that there is going to be a fundamental shift soon.
While, the head of City Pub Group (LON:CPC), Clive Watson, said the industry is still recovering and that April would be too early to withdraw certain types of government support.
In view of this, let us take a closer look at the two aforementioned FTSE listed stocks in the hospitality sector and how they have performed:
- The Restaurant Group (LON: RTN)
The Restaurant Group is a UK based restaurants chain, which owns different brands including the popular Wagamama restaurant.
The company recently increased its FY 2021 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) outlook to £73 million and £79 million, subject to no further covid-related disruptions.
(Image source: Refinitiv)
The shares of the company were trading at GBX 86.10, up by 0.12 per cent on 22 November at 14:09 HRS BST. Comparatively, the FTSE 250 index, which it is a part of, was at 23,458.81, down by 0.14 per cent.
The company had a market cap of £657.94 million as of Monday. It has also netted shareholders a one-year return of 36.05 per cent as of 22 November.
- City Pub Group PLC (The) (LON: CPC)
AIM listed group City Pub Group is the owner and operator of a chain of pubs.
The company reported its H1 2021 revenue, for the 26-week period ended on 27 June, was at £8.9 million, compared to £12.1 million in H1 2020.
It also reported its H1 2021 adjusted EBITDA broke even at £0 million, compared to negative £1.2 million in H1 2020, despite facing significant covid-related restrictions.
(Image source: Refinitiv)
The group’s shares were trading at GBX 103.00, down by 0.96 per cent on 22 November at 14:17 HRS BST. Comparatively, the FTSE AIM All-Share index, which it is a part of, was at 1,225.09, down by 0.57 per cent.
The company had a market cap of £108.02 million and its one-year return stood at 17.05 per cent as of Monday.
