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Investment in hospitality sector slumps 14%

Published:  08 June, 2021

Business investment in the hospitality sector slumped 13.7% last year, trailing UK industry as a whole, according to the latest Office for National Statistics (ONS) data.

Business investment in hotels and restaurants fell £621m in 2020, dropping from £4.6bn in 2019 to £3.9bn.

This means the hospitality sector slightly underperformed UK industry as a whole in 2020, after all sectors recorded a 10.2% fall last year compared with 2019.

Moreover, the hospitality sector also recorded a big slump in the final quarter of the year, with total business investment in Q4 2020 only reaching £898m — a 22.2% year on year (£256m) drop.

The latter figure clearly demonstrates the challenge still facing an industry that continues to be one of the worst affected by the pandemic.

“It was a particularly difficult year for the hospitality sector and no surprise that its business investment figures trailed UK industry as a whole,” said Mark Tighe, CEO of business tax relief consultancy Catax

“However, consumers have a huge nest egg of accidental savings that will make itself felt as Covid restrictions fall away this summer. Hospitality is one of the key sectors primed to benefit strongly from an opening of the floodgates and we expect to see a dramatic improvement in the level of business investment this year,” he said.

UK GDP shrank considerably last year due to the consequences of the Covid crisis, declining 9.8% compared with 2019 — the worst annual performance on record (ONS).

At the beginning of the year, UK Hospitality said GDP figures for November (just released then) highlighted the impact of hospitality on the UK’s economy and made the case for the sector to be “at the heart of reopening plans”.