Restaurants and hotels hit hard by coronavirus, ONS data shows

Over three-quarters of businesses in the accommodation and food service sectors, including hotels and restaurants, experienced a drop in profits and turnover over the last few weeks compared with expectations in normal times, new data suggests.

The Office for National Statistics found that half of businesses in the accommodation and food service sectors who took part in the latest poll had less than three months’ worth of cash reserves left.

Twenty-eight per cent of surveyed accommodation and food firms said they had no or low confidence that they would survive the next three months, the ONS’ latest voluntary fortnightly business survey covering the period from 14 to 23 December said.

Suffering: Businesses like restaurants and hotels have been hard hit by the pandemic 

Sector updates: A chart showing turnover and profit results in different sectors over a select period 

In the latest survey period covered, 41 per cent of businesses in the accommodation and food service sectors were temporarily closed or paused trading, compared with 13 per cent across all industries .

The ONS said today: ‘When splitting the industry into finer detail, the accommodation industry had 28% of its businesses temporarily closed or paused trading, compared with 43% in the food and beverage service activities industry.

‘The arts, entertainment and recreation industry and the education industry (private sector and higher education businesses only) had the next highest percentages of businesses temporarily closed or paused trading, at 23% and 20% respectively.’

Open or closed? A chart showing the proportion of firms surveyed in the food service and accommodation sector open or shut 

Business impact: A chart showing that 41% of businesses surveyed in the food service and accommodation sector were closed between 14 to 23 December

The proportion of people on furlough leave across all industries has fallen from 16 per cent between 16 to 29 November to 11 per cent in the latest period, the ONS said.

It also revealed that 16 per cent of businesses intend to use increased homeworking as a permanent business model in future. 

The hospitality sector has been hammered by the pandemic, with all manner of companies including hotels, bed and breakfasts, nightclubs, pubs, restaurants and cafes forced to stop-start their businesses since lockdown started in March last year.

Amid a new stringent lockdown, earlier this week Chancellor Rishi Sunak announced a fresh £4.6billion support package for embattled businesses. 

What’s been happening? Impact of Cobid-19 on business profits in recent weeks

Sunak said the Treasury would dole out £4billion worth of one-off ‘top-up grants’ for around 6,000 companies in the hospitality, retail and leisure sectors, with each firm able to receive up to £9,000.

In response to the new finance package, UK Hospitality boss Kate Nicholls, said: ‘This is obviously a very positive step to keep businesses afloat in the immediate term and, for that reason, must be welcomed.’

She added: ‘However, while this announcement is most welcome, make no mistake that this is only a sticking plaster for immediate ills – it is not enough to even cover the costs of many businesses and certainly will not underpin longer-term business viability for our sector. 

To address the inevitable and existential challenges that hospitality faces, we need confirmation of extensions to the business rates holiday and of the 5% VAT rate.

‘On its own, today’s support is not enough. Businesses need a longer-term economic plan and it would befit the crisis that we face if the Chancellor brought forward his Budget to make the announcements necessary to reassure businesses and allow them to plan their survival. Commercial certainty cannot come soon enough and only the Chancellor can deliver it.’

Figures published by the ONS in December revealed that there were 819,000 fewer workers on company payrolls in November than at the beginning of the pandemic.

Hospitality was the worst hit sector, accounting for a third of the job losses, followed by retail, the ONS said last month.

The country’s unemployment rate rose to 4.9 per cent in the three months to October, with the jobless total up to 1.7million people. Redundancy levels also hit a record high over the period.

This post first appeared on Dailymail.co.uk