Hospitality sector yet to reap Freedom Day benefits
The UK hospitality sector continues to struggle and is yet to reap the benefits of the July 19 “Freedom Day” according to the latest data from the Xero Small Business Index, part of Xero Small Business Insights.
The data, produced by global small business platform Xero in partnership with Accenture, is based on anonymised and aggregated data from hundreds of thousands of small businesses. This month, it found that sales growth in the hospitality sector deteriorated to -7.5% year-on-year (y/y) in July (down from -0.1% y/y in June).
Typically, the Index compares year-on-year data to reveal how the small business economy is faring. However, as the data from July 2020 was significantly impacted by the pandemic, all comparisons in this release have been made using annualised two-year growth to account for base effects.
Small business sales overall rose 1.7% y/y. This is the fifth month of positive year-on-year growth but is down on the +8.0% y/y result from June. The best performing sectors were information media and telecommunications and retail sales, up 5.5% y/y.
The Index found that jobs in hospitality declined 10.0% y/y, only a marginal improvement from the June figure of -12.9% y/y. After many months of travel restrictions and a poor UK summer, it’s possible that an easing of restrictions led to overseas destinations benefiting from pent-up demand rather than local businesses.
Glen Foster, director, Small Business and Accounting Partners at Xero said: “While it’s good to see that things are recovering gradually, sales and job growth figures are still below average overall. The struggle of hospitality businesses to recover despite the easing of restrictions is a sign that we haven’t seen the back of the pandemic yet.”
“It’s essential we all work together to create an environment which accelerates growth in the coming months, particularly within the hospitality sector,” he added.
Xero has identified the key areas small firms will need greater support to rebuild. The Road to Small Business Recovery includes recommendations on technology access and the creation of a growth economy to help small firms in their recovery. You can read this manifesto here.
More information on the July metrics is available here.
