In a report analysing the pandemic's impact on UK hospitality between January 2020 and June 2021, the ONS reveals that confidence of business survival in the hospitality sector started to increase in May 2021 but remains below the all-sector level.
Data shows that in May 2020, in the height of the first lockdown, turnover was just over £1.2bn, compared with £3.4bn in March 2021 during the final full month of England's third national lockdown.
This rose further to £6.9bn by May 2021 after restrictions were partially eased to allow indoor dining, the highest figure since August 2020. Although this is still around 25% lower than its 2019 level.
Restaurants and mobile food services proved to be particularly resilient, recording a turnover in May 2021 of £3.3bn - five and a half times what it was in May 2020.
By contrast, pubs and nightclubs have been one of the worst affected sub-sectors; turnover in May 2021 was 39% lower than in May 2019, and has consistently remained below 2019 levels since the pandemic began.
This is likely a consequence of businesses being closed or disrupted for long stretches at a time. Pubs have been less able to offer a takeaway service when closed and have had partial restrictions, such as earlier closing times and substantial requirements around eating even when open. Up until 'Freedom Day' today (19 July), nightclubs have remained closed by law since March 2020.
The British Beer & Pub Association (BBPA) says the findings are further evidence of just how hard the hospitality sector, including beer and pubs, have been hit by Covid-19 lockdowns and restrictions, and that investment is now needed in the sector for growth which help build back stronger communities and more jobs.
“This ONS study is yet further evidence of just how devastating the pandemic has been for hospitality," says Emma McClarkin, chief executive of the BBPA.
“The recovery of our sector has only just begun now restrictions have been lifted, but these ONS figures show far our sector has to go to return to viability.
“The numbers are clear – more investment is needed now for our sector so it can play a leading role in building society and the economy back better. The Government must do this by reforming VAT, beer duty and business rates by which pubs and other hospitality businesses are greatly overtaxed."
Most economic indicators point to the start of a recovery for businesses in the hospitality sector, with the labour market showing similar trends.
Since early April 2021, furlough rates in the hospitality sector have been declining. The highest recorded level of furloughed staff was approximately 1.6 million in April 2020; this figure fell to its lowest point since furlough began of 0.6 million in May 2021.
Job vacancies in the hospitality sector have seen large increases and are higher than pre-pandemic levels.
In the period April to June 2021 there were an estimated 102,000 job vacancies in hospitality, nearly five and a half times higher than the 19,000 recorded in December to February 2021.
The total number of pay-rolled employees in the hospitality sector increased to over 1.8 million in June 2021, from a low of 1.7 million in March 2021. However, pay-rolled employees remain below a pre-pandemic figure of over 2 million in February 2020.
Despite growing optimism in some quarters, confidence among businesses remains low.
All sub-sectors of hospitality have consistently reported lower confidence than the 'all other sectors' average, reflecting the greater impact of the pandemic on hospitality.
In early June 2021, only 14% of pubs and bars and only 15% of licensed restaurants reported that they had 'high' confidence that they would survive the next three months. This is much lower than the 47% of businesses from all other sectors that had 'high' confidence of survival in early June 2021, and lower than levels reported in April 2021.
However, there have been signs of improvement within the accommodation sub-sector, where the share of businesses that had 'high' confidence in their own survival over the next three months grew from 39% in early April 2021 to 47% in early June.
“These figures from the ONS highlight how the pandemic has uniquely hit the hospitality sector and it’s devastating consequences for businesses across all parts of the market," says Kate Nicholls, chief executive of UKHospitality.
"While ‘Freedom Day’ sees 12,000 venues finally open their doors and the sector operate viably for the first time in 16 months, hospitality is far from out of the woods.
“For the sector to enjoy a sustainable recovery, Government will need to continue working closely with us in order to put in place the right trading environment including measures such as the extension of the business rates holiday until at least October, allowing firms to bounce back strongly, and to rebuild fragile consumer confidence.
"With the right support, hospitality can be at the forefront of the nation’s economic recovery, creating jobs and reviving our high streets and city centres.”