Delay to “Freedom Day” cost hospitality sector £3 billion in lost revenues, industry boss tells MPs

·2-min read
 (PA Wire)
(PA Wire)

A single additional month of Covid restrictions between June 21 and July 19 is costing the hospitality sector £3 billion in lost revenues, MPs have heard.

Kate Nicholls, chief executive of trade body UKHospitality, addressed the financial hit while appearing in front of a panel of MPs on the Business, Energy and Industrial Strategy committee on Tuesday.

The committee is carrying out an ongoing inquiry into the impact the pandemic has had on businesses and workers across the hospitality, retail and property sectors.

The Government pushed back the now-confirmed full lifting of restrictions until July 19 after initially scheduling so-called "Freedom Day" for June 21 in its roadmap.

Nicholls told MPs that one in five hospitality businesses are still legally prevented from opening in their usual format until July 19, and said operational firms are trading under restrictions that hamper their ability to break even.

She said: "You had that double whammy. An extra month of restrictions cost the sector £3 billion in lost revenue, and four weeks in February is not the same as four weeks at the start of our peak tourism season... it was a hard loss."

Nicholls said that the "biggest impact" on hospitality firm finances in the period was the fact that the Government did not extend full business rates relief beyond June 30, despite the delay.

One in five hospitality firms in England will pay full business rates in this quarter despite operating with restrictions until late July, UKHospitality research has found. Although companies only had to pay 67% of rates from July 1, the cap on the relief is £2 million "so you don't have to be a very big business before you are capped out and you get no more relief", she said.

Around 12% of total UK business rates - a key source of revenues for the Treasury - are traditionally paid by hospitality firms.

Many businesses in the sector are also facing long-term challenges around rent debts to landlords.

Around £2.5 billion in rent debt has accrued in the hospitality sector since the pandemic broke out, Nicholls said. Last month, the Government extended the ban on commercial evictions until March 2022 in a bid to help firms affected by the pandemic.

Ghislaine Halpenny, director of strategy and external affairs at the British Property Federation, told the committee that a total of £6.4 billion in rent debt had accrued across the retail, hospitality, leisure, office and logistics sectors between March 2020 and end March 2021.

The majority of tenants were hospitality and retail, and Halpenny said the total overall arrears to date is likely to be around £7 billion.

Halpenny said over 75% landlords and tenants surveyed have reached agreements over rents or made payments.

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