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Summary
- The latest data has revealed that just 1 per cent of the hospitality sites throughout the UK have been linked to NHS Test and Trace occurrences
- The hospitality & leisure sector has been amongst the worst-hit sectors during the lockdown induced by the coronavirus pandemic
- Socialising ban and introduction of the three-tier system of Covid-19 restrictions could severely damage the businesses
The trade bodies of the UK’s hospitality sector have found that only 275 NHS Test and Trace contact incidences were reported by respondents across 22,500 outlets, which accounts to just 1 per cent of the hospitality venues across the UK. Based on findings, the trade bodies are calling on the government to remove the 10 PM curfew currently in place for hospitality venues. The trade bodies have reiterated that pubs, restaurants, and hospitality venues are COVID-secure as they were linked to just 2.7 per cent of COVID-19 cases, according to the data from Public Health England.
The leisure and entertainment sector came last in the priority list of government for lockdown easing. The battered sector still has to adhere to stringent guidelines such as 10 PM curfew and ‘the rule of 6’ along with social distancing protocols.
The hospitality & leisure sector has been amongst the worst-hit sectors during the lockdown induced by the coronavirus pandemic. The sector witnessed a lot of job losses during the peak of the unprecedented crisis. The UK has been recording a considerable spike in Covid-19 infections since mid-September.
The UK witnessed a series of local lockdowns across parts of northern Britain and London that could lead to the closure of pubs and restaurants. Britons were also advised to avoid socialising and going outside until necessary. Pubs and Restaurants are key avenues for people to socialise.
As the coronavirus cases continue to rise, the enforcement of evening curfews and local lockdowns might lead to collapses in the ailing sector as the coronavirus pandemic seems to be a never-ending saga for the Hospitality & Leisure sector in the UK. As the woes might continue to linger in the battered sector for an extended period, the pubs and bars are in dire need of a dedicated bailout package. The British Beer and Pub Association (BBPA) has called upon the government to roll out a sector-specific furlough scheme and extend VAT cuts beyond October.
The unemployment rate in the UK is currently hovering around 5 per cent as the state-backed job retention scheme (JRS) will be phased out by the end of October. Though the scheme will be replaced by a new Job Support scheme, the industry leaders have called for more support from the government.
In July, the hospitality sector was last on the list of government in terms of lockdown easing. The Chancellor of the Exchequer, Rishi Sunak announced ‘Eat Out to Help Out’ discount scheme to encourage the already battered hospitality sector and to incentivise people to eat out. In addition, the government had reduced the VAT form 20 per cent to 5 per cent.
Also read: Performance of Pubs And Restaurant Stocks Amid Likely Total Social Lockdown Plans
Let us put our lens through some prominent businesses in the sector.
- JD Wetherspoon (LON: JDW)
From July to October, Wetherspoon’s 429 employees tested positive for coronavirus, which accounts to just 1 per cent of its 43,000 strong workforces.
JD Wetherspoon though slumped to the first loss of £105 million this year, in its history as the pub chain witnessed a drop of 30 per cent in sales in the wake of coronavirus crisis and socialising restrictions. The £29 million in Covid-related costs weighed down heavily on the company’s profits. The firm planned to reopen with protective screens placed between tables along with protective gear for staff.
On 29 October, Wetherspoon’s shares were trading at GBX 859.50 (GMT 12:34 PM +1), down by 0.35 per cent from the previous day closing price. The market capitalisation of Wetherspoon stood at £ 1,038.28 million. Wetherspoon created a new low of GBX 559.50 during the peak of unprecedented crisis. Since then, Wetherspoon’s shares have delivered a price return of 54.33 per cent.
Also read: Pubs and Bars Call for Government Support Amid the New Social Distancing Norms
- Marston’s Plc (LON:MARS)
The government restrictions seem to have weighed down heavily on the pubs and brewing company, Marston’s Plc. It is planning to axe more than two thousand jobs. Going further, socialising ban and introduction of the three-tier system of Covid-19 restrictions could severely damage the business of the company.
On 29 October, Marston’s shares were trading at GBX 47.12 (GMT 12:46 PM +1), down by 2.73 per cent from the previous day closing price. The market capitalisation of Marston’s stood at £ 307.13 million. Marston’s created a new low of GBX 22.20 during the peak of unprecedented crisis. Since then, Marston’s shares have delivered a price return of 112 per cent.
Industry experts opine that without a proper financial support package from the British government, the sector might witness business collapses and result in further job losses. The major chunk of earnings is made in the evenings, and the 10 PM curfew has been weighing heavily on the businesses. The government should consider removing the ban in the medium risk areas. Singling out the hospitality and the leisure sector is not fair, and a discouragement to the cultural side of the UK’s economy. The job support scheme is not a permanent solution to protect jobs in the ailing sector. At some point in time, the British government would have to pull the plug on these schemes.
