Hospitality & leisure support measures: Sector will need ongoing support as long as social distancing remains says EY

Christian Mole, EY UK & Ireland Head of Hospitality & Leisure, comments on the extension of support for the hospitality and leisure sectors:

“The hospitality and leisure sectors will be relieved that the furlough scheme, business rates holiday and VAT reduction have been extended – and for longer than expected – as many operators are relying on these measures to remain afloat while trading remains disrupted. The restart grants are also a significant move, which will help businesses to cover ongoing operating costs.

“Although we expect consumer demand to recover relatively quickly, it is important to note that outdoor services will only be profitable for a small portion of the sector. Even after the scheduled 17 May full reopening, social distancing measures are likely to continue to limit operating capacity in restaurants and pubs. Across all hospitality, many operators also face significantly increased debts and deferred rental obligations, which will need to be managed going forward. 

“Hospitality businesses will need ongoing government support as long as these challenges remain in place so it is encouraging to see the sector-specific support being offered.

“The alcohol duty freeze is another welcome measure, particularly for ‘wet-led’ pubs and bars which have not been able to pivot to takeaway and delivery services, and where social distancing and the resulting restrictions on capacity have been particularly challenging.

“From speaking to sector leaders, only a minority wanted to see a restart of government-funded consumer discounts such as ‘Eat Out to Help Out’ so the sector is unlikely to be disappointed that this was not included.

“We would also note that for hotels, whilst the outlook appears positive for leisure demand, the extent and rate of recovery in business travel is uncertain. We expect many hoteliers to continue contending with reduced occupancies for at least the medium term.”

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