Hospitality sector ‘bleeding out’ with looming £1.5bn Christmas Eve rent bill
A £1.5bn rent bill and the sudden drop in seasonal shopping means the hospitality sector faces a flood of bankruptcies in the new year, according to reports.
The £1.5bn payment for rent is due on Christmas Eve, according to the Telegraph, which first reported the news.
But a third of pubs, bars and restaurants have no cash reserves left, according to trade body UK Hospitality, while one in five businesses have seen sales drop by over 60 per cent last weekend, in the final run-up to Christmas.
“Cancellations have annihilated cash reserves,” observed UK Hospitality chief executive Kate Nicholls.
A surge of cancellations have already crept into next year, with four in five operators already seeing booking cancellations for the first quarter of 2022.
Almost 90 per cent of operators are already bemoaning the impact to New Year’s Eve trading too, saying they feel negative about the trading outlook for the last day of the year.
Nicholls warned that “trading levels are now so low that without Government support many businesses will not survive into the New Year and jobs will be lost.”
According to UK Hospitality data, 10 per cent of pubs and 14 per cent of restaurants are “very likely” to fail as a result of the crushing pressures on business.
The news comes as fears that the UK is headed towards another lockdown grow.
“Hospitality operators desperately want to keep their doors open and trade their way to recovery,” said Nicholls, noting the importance of the Christmas period for balance sheets, as it is normally a lucrative and crucial time for hospitality and retail.
She said the sector urgently needed government support through grants, an extension of business rates relief and the lower VAT rate in order to survive the frosty Christmas period.
Business owners have already called for greater government support and stronger communication after Health Secretary Sajid Javid said there were “no guarantees” in a pandemic, implying that tougher Covid measures could be introduced before Christmas.
Over 100 destinations across the UK and 100,000 retail, hospitality and leisure businesses wrote a letter to the Prime Minister yesterday calling for a #BusinessBooster and urgent assurances that financial support will be provided to these sectors who are hitting rock bottom following Plan B measures.
But immediate support looks increasingly unlikely as Boris Johnson has responded only to say the existing measures would be kept under review.