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Hospitality to lag behind during post-Covid recovery, says EY | Article

The hospitality sector is expected to take longer than most other sectors to recover jobs lost in 2020, employing substantially fewer people in 2023 than it did in 2019, according to EY’s latest Regional Economic Forecast.

Employment in the hospitality sector is forecast to fall by the equivalent of an annual average of -1.39% by 2023 compared with 2019, behind mining (-2.31%), manufacturing (-1.55%) and water and waste management (-1.50%).

When measured by Gross Value Added (GVA), the hospitality sector is also forecast to be smaller in 2023 than it was in 2019, and is expected to see the equivalent of an annual average -1.36% decline. 

The forecast shows the sector will see regional inequalities, with the largest declines in employment found in the South West (-1.83% per year between 2019-23) and the West Midlands (-1.71%). The regions likely to see the lowest declines in employment are London (-0.97%) and the South East (-1.07%).

The GVA measure shows a similar pattern, with the South West hospitality sector declining by -1.86% and the West Midlands sector by -1.73%, compared with London by -1.00% and the South East by -1.10%.

Christian Mole, EY’s UK&I head of Hospitality and Leisure, said: “There is no doubt that hospitality is one of the sectors most adversely affected by the Covid-19 pandemic. Social distancing and lockdown measures significantly affected trading levels, adding to pre-existing challenges facing branded restaurants in particular, including over-supply and unsustainable rents. 

“Pubs and hotels, in contrast, entered 2020 in robust health, but have faced disruption to the critical pre-Christmas period, with wet-led pubs and bars particularly exposed.”

He added: “As social distancing restrictions ease and consumer confidence returns during the post-pandemic period, we expect consumer demand for travel and eating out to recover, although the prospects for business travel are more uncertain. 

“Where some businesses were facing the challenge of rising labour costs pre-pandemic due to a talent shortage, this pressure will likely be eased given higher staff availability. While the sector is forecast to have a smaller footprint in the future, the businesses that are resilient enough to survive may ultimately emerge to become healthier and better positioned for long-term growth.”

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