Thursday, October 28, 2021

Hospitality sector set for £314m boost in first week of lockdown lifting

England’s hospitality sector is set for a £314 million boost in the first week of opening for outdoor service, according to the Centre for Economics and Business Research (CEBR).

The nation’s pubs, restaurants, bars and cafes have been shuttered for all but delivery and takeaway services for more than three months during the third national lockdown.

Pre-pandemic, households across England spent a cumulative £663 million per week on dining and drinking out. In recent months, however, this has gone down to zero apart for takeaways (which are excluded from this analysis).

In order to gauge what this figure will rise to is to examine hospitality occupancy rates immediately after the first and second national lockdowns, which ended on 4 July and 2 December, respectively.

According to OpenTable figures, which track seated diners from online, phone, and walk-in bookings, in the first week post-lockdown one diner numbers rebounded to 33% of pre-pandemic levels.

In the first week after lockdown two, the rebound was stronger with levels at 56% of the pre-pandemic norm.

The most likely explanation behind the faster rebound after the second lockdown is increased comfort with socialising and being in busy surroundings, as people became more accustomed to living with the pandemic, despite the epidemiological indicators at the time not necessarily justifying this increased comfort.

With more than half of the population at least partially vaccinated, optimism at record highs and a good amount of cash savings and pent-up demand, there are many reasons to believe that demand for restaurants and pubs will rebound even stronger than after the previous two re-openings.

Anyone who like me has been trying to get a dinner reservation for this week and found it impossible would surely tend to agree. Longer opening hours and expected price rises will also provide a revenue boost.

One factor which will be limiting hospitality revenues is that only outdoor service will be allowed until at least May 17. Research from CGA and Alix Partners puts the share of venues with outdoor space (including gardens and terraces, but also more innovative solutions like car parking) at just under 40%.

The shares vary widely between urban and rural settings, but with the relaxation of planning rules even city-based venues can make the most of whatever outdoor space they have and the share of venues opening is set to be somewhat higher than indicated as some busy parts of larger cities convert street space into temporary pedestrianised seating areas.

Taking into account all of these factors we expect restaurants and other dining and drinking venues across England to take in £314 million from outdoor customers in the first week post lockdown. This will be on top of any revenue streams from takeaway orders.

While this is only a fraction of the normal pre-pandemic levels, it will still provide a welcome boost to one of the country’s most impacted sectors.

There is no question however that everyone will be keenly awaiting the confirmation that indoor hospitality will be allowed to resume from May 17, CEBR said, enabling many more venues to reopen and increase capacity.

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