New research for UKHospitality trade association, detailing the lockdown impact on hospitality suppliers, has highlighted the risk of 460,000 job losses if Government does not extend hospitality support to include the supply side of the sector.
The UKHospitality Supplier Alliance survey, carried out by CGA, shows how hospitality suppliers have suffered alongside operators during lockdown and why they will be critical to a successful restart.
The specialist nature of hospitality means many suppliers are sector-dedicated, with 69% of survey respondents having 75% or more of their revenue purely within hospitality. As a result, suppliers have suffered an average decline in trade of 78%, with 1-in-4 suppliers not trading at all.
Looking to the restart, suppliers recognise their central role, with two-thirds highlighting the importance of their services to an operator’s ability to re-open smoothly. Despite months of little to no revenue and a precarious immediate trading environment, given social distancing requirements, the research reveals the level at which suppliers will need to invest months ahead of any income Overall, 82% of suppliers say they recognise the importance of their products and services being in place prior to re-opening.
The survey results also spell out the fragile state of supplier confidence, the current hardships faced, the prospect of mass redundancies and of business closures if Government support is not extended through early trading.
The feedback also reveals how suppliers have had mixed success in accessing support and are concerned should Government support be withdrawn while operators are either still closed or open but trading at historically low levels. In such circumstances, 1-in-5 suppliers expect to close, while 3-in-4 will have to make redundancies. With an average redundancy rate of 40%, that would equate to 460,000 job losses across the hospitality supplier sector.
UK Hospitality is now asking suppliers to contact their MP and raise awareness of the clear need for further Government support. A template letter and instructions on identifying local MPs is available on the UKHospitality website - https://www.ukhospitality.org.uk/page/UKHSupplierAlliance.
“Extending Government support to suppliers through a lengthy and painful recovery, with venues expecting levels of trade to be significantly suppressed for many months to come, will allow us to avoid this scenario. Suppliers forecast six months support should allow them to avoid redundancies with a further month helping them remove the risk of business closures,” said UK Hospitality Chief Executive Kate Nicholls.
“The supplier network is integral to the hospitality ecosystem. These businesses will provide critical support to operators and will be an essential part of a successful restart. Suppliers will also be the last to be paid. It is vital therefore that Government provides immediate support through to the point where our world-class hospitality venues are commercially viable. Our ask, therefore, is a simple one: parity with operators so that any ongoing measures in support of hospitality include the wider ecosystem.
“We have been encouraged to see a shift in guidance in some areas, for example on discretionary grants, to recognise suppliers are a significant part of the hospitality sector. However, Government needs to adopt this position more widely to ensure suppliers benefit from measures targeted at hospitality businesses.
“After months of little to no revenue and with a requirement to invest in order to play their part in the restart, the supply chain is at a critical point. Support now and they can play their part in ensuring the UK’s world-class hospitality sector bounces back sharply. Without support, many will go to the wall, operators will disappoint their customers and a potential 460,000 team members will find themselves unemployed”.