BRIEFING PAPERNumber CBP 9111, 23 March 2021Hospitality industry andCovid-19By Georgina Hutton andNiamh FoleyContents:1. Hospitality industry in the UK2. Impact of Covid-19 onhospitality industry3. Support for the ry intranet.parliament.uk/commons-library [email protected] @commonslibrary
2Hospitality industry and Covid-19ContentsSummary188.8.131.52.31.4Hospitality industry in the UKWhat is the hospitality industry?Economic output of the hospitality pact of Covid-19 on hospitality industryHospitality restrictionsConsumer demandEconomic outputBusiness turnover and trading statusLabour market impactWorkersWeekly hoursCoronavirus Job Retention Scheme1111121313171718184.108.40.206Support for the hospitality industrySupport for the hospitality sectorCalls for further support212124Cover page image attribution photo by Pixabay from Pexels
3Commons Library Briefing, 22 March 2021SummaryHospitality industry in the UKThe hospitality industry primarily refers to food and accommodation services industries.This means restaurants, cafes, pubs, bars, catering, hotels, camp sites and otheraccommodation.In 2019 the hospitality sector contributed 59.3 billion in Gross Value Added to the UKeconomy, around 3.0% of total UK economic output. In the three months to September2020, there were 2.38 million jobs in the hospitality sector in the UK, representing 6.9%of total UK employment. There were 223,045 hospitality businesses in the UK as of 1January 2020, 3.7% of all UK businesses. Of these, 137,225 were employers, 10% of theUK total. Hospitality businesses represent 3-5% of businesses in each country and region.The excel sheet attached to this briefing allows users to view the number ofaccommodation and food/beverage businesses and employment by Parliamentaryconstituency and local authority area. The Library briefing on Pub Statistics provides dataon the number of pubs by constituency.Impact of Covid-19The food & accommodation sector has been one of the hardest hit sectors by thepandemic. Restrictions on trading have significantly impacted hospitality businessturnover. Economic output in the hospitality sector was down 90% in April 2020compared to February 2020. Output recovered over the summer of 2020, boosted byeasing coronavirus restrictions and the Eat Out to Help Out scheme in August, but was stillbelow pre-pandemic levels. Output declined again from September as Covid-19 cases roseand restrictions were imposed. Ongoing fixed costs and accumulating debt alongsidepersistent lower revenues and low cash reserves are a major concern for the sector.As of early March (22 Feb–7 March 2021) the ONS reported that 43% hospitalitybusinesses were trading, compared to 74% across all industries. 55% of hospitalitybusinesses had temporarily paused trading, compared to 24% across all industries. Almost1 in 5 hospitality businesses (19%) had “low confidence” that their business wouldsurvive the next 3 months.From January-March 2020 to July-September 2020, the number of workers in the sectorfell by 6% (147,000). However, the pandemic has not yet resulted in the expectedincrease in unemployment, partly due to the Coronavirus Job Retention Scheme (CJRS).The number of jobs on furlough under the CJRS in the food & accommodation sectorpeaked on 10 April 2020, at 1.6 million jobs. From April to October, the number offurloughed jobs fell significantly. However, there have been increases due to two separatenational lockdowns since October. On 31 January, 56% of eligible jobs in food &accommodation were furloughed under the CJRS, compared to 16% across all industries.Support for the hospitality industryThe hospitality industry has seen high take-up of UK Government business supportschemes such as the CJRS and business loans. The Government has also provided supportschemes targeted to the hospitality industry, such as the Eat Out to Help Out Scheme,reduced VAT rate, a business rates holiday for 2020/21 (extended to 30 June 2021) and aseries of small business grants. Separate grant schemes and business rates relief apply inthe devolved Administrations.
4Hospitality industry and Covid-191. Hospitality industry in the UK1.1 What is the hospitality industry?The hospitality industry primarily refers to food and accommodationservice industries. 1 This means restaurants, cafes, pubs, bars, catering,hotels, campsites and other accommodation. This is the definition of theindustry used in this paper.The term hospitality is often used more broadly to include leisureattractions and events services. The trade body UK Hospitality (whichrepresents the hospitality and leisure industry) includes convention andtrade show organisers, amusement and recreation activities in theirdefinition of the industry, in their economic analysis of the sector. 2Other industries such as the wedding industry and events industry alsooverlap considerably with hospitality services but are difficult to definein official statistics (Box 1).The hospitality industry is a significant contributor to the tourismindustry – the industries overlap considerably but are not the same.Tourism refers to providing services and activities to domestic andinternational visitors for business, leisure or other purposes.Box 1: Wedding and events industriesThere is no official definition of the wedding or events industry. Because of the way that industrialsectors are classified in official statistics, it is very difficult to estimate the size or contribution of thesesectors to the overall UK economy.Industrial sectors are classified according to the Standard Industrial Classification (SIC) codes that grouptogether similar types of economic activity. These categories are standardised internationally and werelast revised in 2007. There are some SIC codes relevant to the events industry, such as event catering,the organisation of conventions and trade shows and letting exhibition centres. 3 However, the eventsindustry comprises a much broader range of activities and services including for example, marketing,audio-visual services, and hospitality services such as hotels for accommodation and facilities. There isno way in official figures to disaggregate the contribution of these services due to events. 4 In 2019Oxford Economics published a report (commissioned by events industry trade alliance) on the economicimpacts of exhibitions.Similarly, there is no separate SIC code for the wedding industry and no way to disentangle weddingservices from other services of the same type in official figures. For example, while there is official datafor the value of the catering and photography services, many caterers and photographers wouldprovide services for weddings as well as other events.1234Standard Industrial Classification Section I (Food & Accommodation Services).UK Hospitality, Economic contribution of the UK hospitality industry (2018); accessed6 January 2021.SIC codes: 82.3 – organisation of conventions and trade shows; 56.21 - Eventcatering; 68.20/2 - letting and operating of conference and exhibition centres;The challenge for capturing the events industry in official statistics has been notedby the industry prior to the coronavirus crisis, see: BVEP, The UK Events Report 2020,accessed 6 January 2021.
5Commons Library Briefing, 22 March 20211.2 Economic output of the hospitality sectorIn 2019 the economic output of the hospitality sector (food &accommodation service) in the UK was 59.3 billion. 5 This correspondsto around 3.0% of total UK economic output. Of this, 17.7 billion(30%) was from accommodation and 41.6 billion (70%) was fromfood and beverage service. 6Almost one quarter (24%) of total output from the sector was based inLondon; 13% was based in the South East. The relative importance offood & accommodation services to the economic output for each regionhowever is similar: food & accommodation makes up 3–4% of the totaleconomic output for each UK country and region.7Hospitality industry: economic summary 2019Hospitality% UK TotalEconomic output (GVA) 59.3 billion3.0%Employment2.53 million6.9%223,0003.7%BusinessesNotes: GVA is a measure of economic output similar to GDP; Business count is for 1 January 2020;Employment is for the three months to March 2020. Note employment is not the same as thenumber of people employed in the sector, as individuals may hold more than one job.Sources: ONS, GDP output approach - low level aggregates, 12 September 2020; ONS, WorkforceJobs, via NOMIS Workforce jobs by industry; BEIS, Business Population Estimates: 2020, 8 October2020.1.3 BusinessesThere were 223,045 food and accommodation businesses in the UK asof 1 January 2020, 3.7% of all businesses in the UK.8 Of these, 137,225were employers, 10% of the UK total. There were 172,390 were foodand drink service businesses (77%); and 50,660 accommodationbusinesses (23%).918% of UK food and accommodation businesses are based in London(40,816 businesses). However, the proportion of food andaccommodation businesses in each region and country is broadly similar(shown in the chart below). Wales has the highest proportion ofhospitality businesses, representing 5.5% of all businesses in Wales.Northern Ireland has the lowest, representing 2.8% of businesses inNorthern Ireland. 105678910Gross Value Added (GVA). GVA is a measure of economic activity similar to GDP.GVA is the contribution of part of the economy, minus costs incurred in production.Source: ONS, GDP output approach - low level aggregates, 12 September 2020,data series KKJ3, KK7V and KK7X.Source: ONS, Regional gross value added (balanced) by industry: all NUTS levelregions, 19 December 2019.BEIS, Business Population Estimates 2020, 1 October 2020, Table 5 and 6.BEIS, Business Population Estimates 2020, 1 October 2020, Table 5 and 6. Numbersdo not add to total due to rounding.BEIS, Business Population Estimates 2020, 1 October 2020. The data is based on thehead office location of the businesses, individual business units/workplaces are notcounted separately.
6Hospitality industry and Covid-19Hospitality businesses represent 3–5% of the businesspopulation in UK countries and regions% of buisness population in each country and region, Note: data based on the head office location of the businesses, individual businessunits/workplaces are not counted separately.Source: BEIS, Business Population Estimates: 2020, 8 October 2020.Most hospitality businesses are small or medium enterprises (SMEs) (as isthe case across most sectors). 97% of hospitality employers (133,315)businesses were micro or small businesses (1–49 employees). Therewere 3,235 medium-sized businesses (50–249 employees) and 675large businesses (250 employees).11The Department for Business Energy and Industry Strategy (BEIS) SmallBusiness Survey 2019 reported that hospitality had higher proportionsof SMEs led by minority ethnic groups and women compared to othersectors. 12 7% of hospitality SME employers were minority ethnic-ledbusinesses (compared to 5% across all industries). 13 21% of hospitalitySME employers were led by women (compared to 15% across allsectors).Box 2: Hospitality businesses and employment: local dataThe excel sheet attached to this briefing provides the number of accommodation and food/beveragebusinesses and employment by Parliamentary constituency and local authority area. The data onlyincludes businesses registered for Value Added Tax (VAT, 85,000 turnover threshold) and/or withemployees registered for Pay-As-You-Earn (PAYE) so are not comparable to the figures shown in thepaper.The Library briefing on Pub Statistics provides statistics on pub numbers by Parliamentary constituency.The British Beer and Pub Association have published an online dashboard allowing users to view pubnumbers and employment by constituency and local authority area.111213BEIS, Business Population Estimates 2020, 1 October 2020, Table 5.Business where at least half of the leadership team are women or come fromminority ethnic groups, respectively. BEIS, Small Business Survey 2019: businesseswith employees, 4 June 2020, Table 25 and 26.Data on breakdown by different minority ethnic groups is not available. Minorityethnic groups included those classified as being from mixed race backgrounds,Indian, Pakistani, Bangladeshi, other Asian background, black Caribbean, blackAfrican, other Black background, Chinese, Arab or Gypsy or Irish traveller. See: SmallBusiness Survey 2019: methodology.
7Commons Library Briefing, 22 March 20211.4 EmploymentIn the three months to September 2020, there were 2.38 million jobs inthe accommodation and food service sector in the UK, representing6.9% of total UK employment.14 Note that this does not represent thenumber of people working in the sector, as individuals may hold morethan one job.From March 2011 to March 2020, the number of jobs in the sector hasoverall been rising. In the three months to March 2020, the number ofjobs reached 2.53 million, a record high since 1978. From January–March 2020 to July–September 2020, there has been a fall of 147,000jobs in the food and accommodation sector. More information on theimpact of the coronavirus pandemic on jobs in the sector can be foundin section 2.5 of this paper.Jobs in the food service and accommodation sectorQuarterly data, seasonally adjusted, September 2007–September 20203,0002,5002,0001,5001,0005000Sep 2007Sep 2009Sep 2011Sep 2013Sep 2015Sep 2017Sep 2019Source: ONS, Labour Market overview December 2020, Dataset A01 (table 6), 15 December 2020The sector has the 7th highest proportion of jobs (6.9%) of the main 20sectors 15 from the ONS’ Standard Industrial Classification (SIC) system.Taking a broader definition of the hospitality and leisure industry (seesection 1.1), the hospitality trade body (UK Hospitality) says the sector isthe “third largest employer in the UK”. 16Region and c
The hospitality industry has seen high take -up of UK Government : business support schemes such as the CJRS and business loans. The Government has also provided support schemes targeted to the hospitality industry , such as the Eat Out to Help Out Scheme , reduced VAT rate, a business rates holiday for 2020/21 (extended to 30 June 2021) and a series of small business grants . Separate grant .