Just one in five hospitality businesses have enough cash flow to survive beyond February, new research from UKHospitality has found.
As part of its evidence to the Treasury Select Committee Inquiry into the Economic Impact of Coronavirus, the trade association highlighted that four in 10 sector businesses stated that they would fail by mid-2021, without immediate further support.
Recent figures from UKHospitality’s quarterly sales tracker, in partnership with CGA, revealed the devastating impact of the pandemic to the sector in 2020 – with sales collapsing by 54% sector resulting in a loss in revenue of £72bn.
2020 marked the industry’s worst year of trading on record, with many businesses left on the verge of collapse, with no end date in sight, UKHospitality has warned.
The sector’s decline is likely to have knocked off over 2 percentage points from total national GDP. It is more than 10 times worse than the impact of the 2008 financial crisis for hospitality.
UHospitality has sent evidence of how the sector can recover to the Treasury Committee ahead of the Budget announcement, with two clear proposals:
- Extend the VAT cut to 5% to for a further 12 months, and ensure it applies across the broad hospitality sector, to stimulate economic activity
- Enact a further business rates holiday for hospitality for 2021/22 to protect communities and repair businesses.
UKHospitality chief executive Kate Nicholls said: “Put simply, hospitality is battling for survival. Our sector has been the hardest hit sector by the pandemic and is staring into the abyss. But if the right conditions and support are put in place, we could be justifiably optimistic of the future role hospitality can play in returning the country to growth and boosting employment.
“The VAT cut and business rates holiday were two key measures that Government correctly identified in 2020 that would stimulate economic activity and assist businesses. With subsequent lockdowns and restrictions many in hospitality have been unable to recoup the intended benefits. Extending these measures would act as a critical revival system – saving many jobs and setting up the economy for much need job creation for the rest of the year.”