The outlook for the hospitality sector at the start of the Christmas trading period is decidedly unfestive, writes Wylie & Bisset partner Catherine Livingstone
A decidedly disappointing autumn Budget coupled with the prospect of an extension of the covid passport scheme have served to dampen any cheer amongst those licensees hoping for a return to pre-covid trading levels over the rapidly approaching festive period.
Chancellor Rishi Sunak’s budget included a 5% cut in duty for draught beer and cider sold
from containers over 40 litres, which he claimed would equate to a 3p cut in the price of a pint.
But with licensees facing increased staff costs with the culmination of the furlough scheme,
together with rises in the cost of utility supplies against a background of rising inflation, the
Budget measures are simply inadequate to make any real financial benefit to the licensed trade.
What is needed to do that is a more fundamental reform of the alcohol duty system whereby on-trade businesses can claim a rebate on a percentage of the duty they pay, while duty in the off-trade is increased to raise prices and make the scheme revenue-neutral.
Meanwhile, many licensees are disappointed with deputy first Minister John Swinney’s announcement that the Scottish Government is considering an extension of the coronavirus passport scheme, which requires people to prove they have had two COVID vaccines before they can enter nightclubs and some large events.
Introduced at the start of October, the scheme currently applies to nightclubs, unseated indoor events with more than 500 people, unseated outdoor events with more than 4000 people, and any event where more than 10,000 people are present.
Combined with a lacklustre budget, these measures mean that the outlook for the hospitality sector of the festive period is that it is unlikely to be as busy as pre-COVID festive trade.
And with many licensees facing the prospect of a decidedly un-festive festive period, they would be advised to reflect on what lessons have been learned over the course of the last 18 months to help them progress with a more robust business model.
But whatever shape their business takes going forward, what will remain constant is the fact that cashflow is critical. Will you have enough money in the bank to pay the bills? That’s the bottom line.
Now is the perfect time to prepare cashflow forecasts. I would urge licensees to review the longer-term financial health of their operations as a matter of urgency.
- Catherine Livingstone is a partner and head of the business advisory services team at Wylie & Bisset
