'Frightful festive trading figures' leaves hospitality facing £3bn hit

Sales were a massive 60% down on Christmas Day as customers opted not to dine out, while Boxing Day sales fell by a third (31%). And takings on New Year’s Eve – one of the biggest individual trading days in the calendar for many venues – were down by more than a quarter (27%).

The depressed figures, captured by UKHospitality and specialist insight consultancy CGA, represent a ‘lost Christmas’ and cap off a devastating December.

Venues in Scotland and Wales were hit even worse due to the more stringent restrictions imposed in both countries. The sector in Wales performed twice as badly as England, and in Scotland two-and-a-half times worse in the week ending 1 January 2022.

Overall, the findings demonstrate how the industry’s fight to recover from the pandemic has been severely hampered by Omicron, with UKHospitality noting that in the weeks prior to the new variant emerging average sales had been recovering steadily through the autumn and were close to pre-pandemic levels (98%).

“December is a vital period for hospitality businesses, equal to three months’ worth of trading for many," says Kate Nicholls, UKHospitality chief executive. ​

"These new figures are crippling for an industry already struggling, but also spell disaster for the wider UK economic recovery as ONS figures showed that overall growth in the third quarter was driven by hospitality.

“These sales drops versus 2019, and also against our members’ projections before the onset of the new Omicron variant, will have taken most businesses from healthy trading for the month to painful losses, delaying the sector’s recovery and extending hospitality’s long Covid. Cash reserves are severely depleted, and some businesses will struggle to survive the first quarter of 2022.

“This dreadfully disappointing December has further stymied our ability to deliver jobs, growth and investment at pace, which we all know is so crucial to the recovery of our economy overall.”

Companies operating groups or chains of pubs or restaurants fared slightly better than independents, according to data analysed from the CGA Managed Volume Pool, which is based on actual sales from 5,500 pubs, bars and restaurants, operated by multiple-site businesses. 

These venues, which are typically larger and better invested, saw sales fall a third in the week up to Christmas and by around a fifth in the week up to New Year.

Against this backdrop, hospitality is facing significant headwinds in 2022, compounding a challenging outlook for thousands of businesses and millions of workers.

Sector businesses face a cliff edge in April, UKHospitality warns, when VAT is set to return to 20%, plus a rise in business rates and labour costs. The trade body adds that this will be further aggravated by soaring energy costs, the growing cost of food and drink, and an end to the rent moratorium.

“A pivotal moment for the recovery is approaching," continues Nicholls.

"As recent quarterly GDP figures show, the hospitality sector can play a leading role in driving the recovery. 

"Crucial to this is the right support and keeping VAT at 12.5% will enable the sector to safeguard jobs and crucially, it will help keep down costs for our guests amid some very strong inflationary pressures. Reducing rates bills in 2022/23 will also be important in enabling businesses to recover again.”