Christmas party cancellations ‘near Omicron level amid UK strikes’

Christmas party cancellations ‘near Omicron level amid UK strikes’

9 Dec    Finance News

Pubs and restaurants have suffered a collapse in Christmas party bookings due to next week’s UK rail strikes.

Industry chiefs suggest the plunge is as bad as last year when cases of the Omicron variant of Covid-19 were surging, which hit hospitality firms in the run up to last Christmas.

Kate Nicholls, chief executive officer of the trade body UKHospitality, said businesses were reporting cancellation rates of as much as 30%, which could blow a £1.5 billion black hole in revenues.

The RMT union is holding strikes on 13-14 December [next Tuesday and Wednesday] and 16-17 December [Friday and Saturday], and from 6pm on Christmas Eve until 7am on 27 December. Network Rail has warned passengers ‘only travel if necessary’ on those dates.

“We’re getting into omicron territory,” Nicholls told Bloomberg, adding: “A lot of people are saying it’s too difficult to come in, and if you’re writing off next week, you might as well write off the week after. So it’s going to be an early Christmas shutdown.”

The hospitality sector is already reeling from surging energy costs, staff shortages and falling bookings, leading UK restaurants to go bust at a faster rate than during the Covid crisis.

“Insolvencies of restaurant businesses are now happening at a far faster rate than during Covid,” Rebecca Dacre, a partner at Mazars, said. “It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restaurateurs have not seen this combination of negative factors before.”

Industry lobby groups including UK Hospitality and the British Beer and Pub Association said last month that more than a third of hospitality businesses could go bust by early 2023.

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While the industry experienced a rebound in business this summer after a string of forced closures during Covid lockdown periods, restaurants are now struggling with surging inflation, which has not only increased the cost of energy, food and drinks, but meant their customers have less money to spend on going out.

Barclaycard recently reported that more than half of Britons were planning to cut down on essential spending, raising concerns about revenues from the Christmas period, when many businesses make the bulk of their profits.

Some firms are also struggling to recruit enough employees as post-Brexit rules on migration block EU citizens from working in the UK. This has contributed to higher wage inflation.

Mazars said the combined pressures were likely to spell a tough few months for the industry, despite the usually lucrative holiday period.

“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat,” Dacre said. “There’s a certainty of further insolvencies if they don’t receive much more support from the government, but the chances of the government fully turning on the taps is low.”

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