Hospitality spending plunges 30% as firms report weak confidence

Consumer spending in the hospitality sector is still around 30% below pre-pandemic levels and firms have reported waning confidence, according to new data.

A report by the Office for National Statistics into the impact on the sector from the pandemic highlighted the heavy financial toll despite the recent reopening of venues.

It said card transaction data for the week to June 27 showed spending on pubs and restaurants has recovered significantly from its low during the first lockdown but is still 36% below its pre-pandemic level.

The figures also showed business turnover recovered to £6.9 billion in May 2021 after the partial easing of restrictions but this was still around a quarter below the same period in 2019.

Hugh Stickland, senior economist at the ONS, said: “Today’s figures show that while spending on food, drink and accommodation have recovered somewhat from the rock-bottom seen during the first lockdown, it still has quite a way to go.

“Confidence about the future remains low across hospitality, possibly further hit by the delay to full reopening, showing the pressure the sector is under.”

The data also revealed only a small proportion of companies are very confident they can ride out the financial impact of the pandemic.

In the first two weeks of June, only 14% of pubs and bars and 15% of restaurant businesses said they were “highly confident” they would survive the next three months.

However, accommodation business such as hotels reported improving confidence, with 47% of these companies reporting high confidence during the same period.

The sector also reported a significant recent jump in job vacancies, with recently reopened sites looking to take on more staff causing it to rise above pre-pandemic levels.

However, the number of employees in the sector in June was still 11% below pre-pandemic levels from February 2020.

It comes as hospitality bosses also criticise self-isolation rules, with pub firm Greene King closing 33 sites due to staff shortages due to isolation notifications from the NHS Covid app.

Emma McClarkin, chief executive of the British Beer & Pub Association, said: “The recovery of our sector has only just begun now restrictions have been lifted, but these ONS figures show how 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.”