This week saw the Government announce that more than 15 million people in the UK have now received their first dose of the Covid-19 vaccine, and since then sentiment has been high. British stocks in the FTSE 100 have also risen as mining and energy stocks tracked strong gains in commodity prices and investors were optimistic about the global vaccine rollouts quickening the economic recovery this year. Because of the success of the vaccines, travel companies and hospitality firms have also seen their shares rise.
In terms of news in the hospitality sector, over 300 restaurant groups, led by takeaway giant Deliveroo, have written to the Prime Minister to urge the government to run the Eat Out to Help Out Scheme again once hospitality is allowed to reopen in order to help the struggling sector.
The scheme, run in August of last year, offered 50% off meals in order to encourage wary customers back into restaurants and pubs, with the Treasury covering the shortfall. August saw increased bookings and revenues compared to earlier in 2020 while on August 3rd bookings were 10% higher than in 2019. In that period the scheme was used over 100 million times, but many felt that the impact was short-lived, especially given the increased restrictions that quickly followed the incentives.
However, at IW Capital, we believe that more practical support needs to be offered to the sector. Gimmicky support schemes like Eat Out to Help Out were great at the start but were never going to be enough.
Hospitality used to qualify for investment under Enterprise Investment Scheme, but unfortunately this was scraped. If EIS was extended to hospitality, we would see a huge increase of investment and private equity into the sector, meaning businesses wouldn’t have to take on more debt to survive, giving them a much larger chance of success in the future.
People will want to get out and spend, businesses want to grow, and investors want to help them do that, it’s a perfect storm for rapid growth. Pubs will bounce back along with restaurants and other hospitality as no one will want to stay at home after the year we’ve had. Working with local residents on redeveloping the pub and hospitality venue Rockwater Hove has shown me how much people want, more than ever, a place to come together as a community. What we need now, however, is real support to help the sector get there.
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