UK hospitality to face staff shortages, margin pressures: Fitch
May 14, 2021
London [UK], May 14 : The UK hospitality sector is facing staff shortages as the pandemic restrictions are gradually lifted and demand returns, Fitch Ratings has said.
EU nationals who left the country following Brexit and employees who switched sectors during the pandemic are the main reasons for anticipated shortages.
"We expect hospitality companies like pubs, hotels and restaurants to incur additional costs of hiring and training new employees, although such margin pressures are likely to be temporary," said Fitch.
The UK pandemic restrictions are being gradually phased out following successful vaccination rollouts so far and reduced infection rates.
Pubs' and restaurants' outdoor serving reopened on April 12 in England and is enjoying surging demand. Indoor mixing is expected to be allowed from May 17 and all legal limits on social contact could be removed on June 21.
Given uncertainties surrounding travelling abroad, demand for domestic holiday accommodation is strong with the most popular destinations already fully booked for the summer.
UK hospitality operators are facing staff shortages as activities resume. Before Brexit, EU nationals made up between 12 and 24 per cent of the total workforce in the UK hospitality industry.
Many of them left the country during the lockdowns. EU nationals now have to obtain a visa in order to enter the country to work which entails securing a job offer that meets minimum salary levels, among other requirements.
The hospitality sector also lost employees to other businesses that remained open during the pandemic.
Fitch expects hospitality operators' costs of hiring and training to increase in the short term, putting pressure on their margins.
They may face increased salary requirements, for example, in order to attract EU nationals, particularly during high summer and early autumn seasons, or to hire skilled employees to train workers with no prior experience.
Besides, the national living wage in the UK was increased by 6.2 per cent on April 1.
"We forecast revenue in the pub sector to reach pre-pandemic levels on a quarterly basis by end-2023. For hotels, we forecast revenue per available room to be below 2019 levels by 15 per cent and around 10 per cent in 2022 and 2023 respectively," said Fitch.
