Yesterday, March 20 2022, was the second anniversary of the first ever lockdown of the entire UK hospitality sector. James Shorthouse, head of Alternative Markets at Colliers looks at some of the changes the pandemic has brought about and the long-term impact on the sector.
With the lifting of the final COVID-19 restrictions last month the Government has signalled that, in most practical respects, the impact of the pandemic on our daily lives has now diminished to the point where it should no longer limit our activities.
It would be naïve to think however that the hospitality sector will quickly revert to business as normal. Customer behaviour has changed; agile working, and structural changes in shopping habits inevitably lead to lower footfall in town centres, and the imminent end of the rent moratorium is likely to lead to some difficult and potentially painful decisions for tenants and landlords alike.
Nevertheless, there are numerous signs that should give the confidence and cause for optimism
Staycation is a boost for pubs and restaurants as well
The latest CGA data and company reports show positive like for like sales growth in most sectors, with particularly good performances in the food and community pub segments. Unsurprisingly the surge in “staycations” has not only benefitted hotels but has also boosted pubs, restaurants, and leisure businesses in those areas. The opening up of international travel will dilute some of the exceptional levels of demand for UK holidays seen in 2020 and 2021, but the reawakening in the public conscious of what Britain has to offer will be to the long term benefit of the hospitality sector.
Customers are also rediscovering the appeal of large scale social events including live music, cinemas, and theatre, in addition to which there is a significant cohort of 18, 19 and 20 year olds who are only now able to experience the night clubs and university events which previous school leavers have taken for granted.
Modernising the leisure market
COVID has had the indirect, and ultimately positive effect, of forcing F&B operators to look at their operating models and practices, and whilst the use of ordering apps may have declined with the removal of table service rules, there is no doubt that the use of technology has become ingrained over the last two years; the value of data and analysis is only just starting to be properly understood and valued by a sector whose pre-pandemic adoption of technology had barely moved beyond the introduction of contactless payment and online reservations.
Staff shortages, the impact of inflationary pressures on discretionary spend, the end of the rent moratorium and the looming Budget are all very immediate concerns that must be dealt with, but looking beyond what we all hope are short term issues, if the last two years have taught us anything then it is that the UK hospitality sector is adaptable, innovative and a key part of the fabric of UK society.
Strong and effective leadership, from operators, investors, and trade bodies has driven the changes that have taken place, and those leaders are now addressing fresh challenges as Government support measures around business rates, VAT and the rent moratorium fall away over the coming months.
Recent transactions such as the sale of The Inn Collection Group have underscored the long-term attractiveness of the hospitality sector to investors. In addition we’ve seen a constant stream of innovative concepts and investment from operators seeking to improve the customer experience and maintain the appeal of their consumers. The hospitality sector has been impacted by COVID to a greater extent than any other part of the UK economy, but despite, or in part as a consequence of the last two years, it is in good shape, and will continue to thrive in the post-COVID world.
James Shorthouse is head of Alternative Markets at Colliers and one of the UK's leading advisers in pub, bar, restaurant and leisure sectors. He has worked in the sector for over 30 years, a period during which the sector has undergone enormous changes in its operational, ownership and regulatory structures. To get in touch, contact James.Shorthouse@colliers.com.