The reduction in business rates for a year will be welcome support for the sector with many not having fully recovered pre-COVID levels of trade. Nervousness around COVID-19 continues to suppress activity particularly when it comes to the ‘grey’ pound. Servicing COVID support loans and VAT arrears is placing further pressure on cash flows leading to an increase in requests for support from smaller independent operators.

As the prohibition on forfeiture and commercial rent arrears recovery (CRAR) ends in March 2022, businesses have time to hold discussions with their landlords to agree payment terms for rent arrears before the deadline and we are suporting clients in this area. The increase in minimum wage in April 2022 will add to operating overheads but many businesses are telling us that wage pressures to recruit and retain good staff are already an issue.  All eyes will certainly be on the level of Christmas trade which must be strong to sustain the sector in the lean months until the spring.

Despite the repayment pressures mentioned above, hospitality clients are telling us that staffing is one of their greatest concerns. With record levels of retirement, a lack of EU labour and many skilled employees having left the sector during the pandemic, recruitment still appears to be a huge concern. There is no quick fix to the issue but a focus on staff retention, training and recruitment is vital.

Hospitality businesses must continue to maintain rolling cash flow forecasts to assist them in navigating the coming months. We would also strongly recommend leaning on existing advisors to produce forecast to take into account the changes in the cost structure for the next 12 months to ensure any finding gaps (if any) are spotted early.

Our restructuring advisory team continue to work with clients in the sector to explore rescue options for affective businesses and early engagement, as always, significantly enhances the prospect of a rescue solution being achieved.