Hotels and Restaurants
Consumer activity within the hospitality sector has been reasonably buoyant in recent years. Except for a slight blip in late 2017 into early 2018, aggregate spending on restaurants and hotels has been on a largely upward trajectory since 2010, with record levels of expenditure witnessed in Q3 2019.
Evidence from the perspective of businesses in the sector has not been so positive, however. Considerable fragility has been witnessed, with this stemming largely through legislation and regulation. The likes of the smoking ban and the now-scrapped alcohol duty escalator have both contributed to a dwindling population of pubs and bars, for instance, with the number of such businesses falling every year between 2008 and 2018. Turnover within the industry had followed a largely similar downward trajectory, hitting its trough in 2014, before picking up slightly in the years since.
The hospitality sector is at risk of long-term structural damage as a consequence of the Covid-19 pandemic and associated restriction measures. Businesses within the sector were forced to close for a longer period than counterparts in the likes of retail and manufacturing. Meanwhile, the implementation of additional sector-specific restrictions poses a further threat to revenue streams, running the risk of widespread business closures. This is perhaps most pertinent amongst businesses in city-centre locations, with the reduced footfall as a result of mass home working greatly impacting passing trade.