The Effect of COVID-19 on the Hospitality Sector (so far…)

 by Dinura Ranmandala

We all know the horrendous effects COVID-19 has had on our health and wellbeing but a silent victim that often goes under the radar is the economy. A bad economy can cause many negatives within a country; high levels of unemployment, money loses its value, increased levels of poverty and inequality. There have been famous cases where 1st world countries have fallen into recessions due to bad decisions. One such was Germany after WW1, people were carrying stacks of money and yet all they could buy were small loaves of bread. Right now, nothing that severe has occurred(fortunately) but a rapid recession is coming forth if we do not take action now. 

One of the hardest hit sectors was the hospitality sector. Due to COVID restrictions people were limited to what activities they could do and how many other people they could meet up with. This dented the hospitality industry as businesses such as restaurants and hotels depended on people coming together to enjoy the services they provide. As of 2018, the hospitality industry was worth more than 100 billion euros and the number of new businesses opening up in the sector had increased by 20 percent in the last 5 years. Over 2000 new restaurants opened up in the UK back in 2019 so one can only imagine how many people decided to open up this year hoping the best for their new business, maybe even sacrificing any other sources of income to help build this dream of being a sole trader. Now all these businesses are suffering from this virus, people are too scared to come and enjoy delicacies and lockdown isn’t allowing them to open up for the minority that are willing to go out to eat. This graph reflects the impact on 60,000 restaurants, showing the average percentiles of customers during the pandemic.

We can see that as soon as the nationwide lockdown started back in March the graph steeply declined to -100 percent and even weeks before that numbers were slowly decreasing as more and more people started to become cautious. The government has offered a grant of £10000 and a furlough scheme for employees to most business and larger amounts to the larger businesses so owners could at least afford the basic necessities during lockdown, however for some this is not enough as they have rent/mortgages to also worry about on top of providing for their families. On the third of August the eat out to help out scheme was introduced to get people back into going to restaurants and spending more time outside, which lasted for the rest of the month. This did wonders for businesses and at one point customers peaked at a 200 percent increase in year over year change in seated restaurants showing that maybe there is hope for the many entrepreneurs out there struggling to make ends meet. However this scheme had its repercussions as the flattening rates of COVID-19 started rising again which led to another lockdown and new tier systems. Sometimes you have to look at both sides of coins, on the heads you have the health of citizens and on the tails you have the declining economy and spending of money on local businesses. Both are important in this scenario but which one is more important considering the short and long term effects?