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Closed for Christmas – The Final Nail in the Coffin for the Hospitality Industry?

The government has announced today that the majority of the country will remain in tier 3 over the Christmas period with only Bristol, North Somerset and Herefordshire having their tier levels reduced. The next review is to take place on 30 December 2020.


The effect of this is that most of the hospitality industry must remain closed over the festive period, which is typically their busiest time of year.



The temporary closure of businesses in March 2020 was worrying for all business owners, but faith was restored by the introduction of the Coronavirus Job Retention Scheme, Bounce Back Loans, Local Authority grants and other government backed initiatives.


All businesses, not at least those in the hospitality industry, had spent considerable time and money making their premises ‘Covid safe’ and training staff in order to re-open. The second lockdown in early November provided yet more uncertainty for businesses, but the expected re-opening on 3 December provided a light at the end of the tunnel, and just in time for the Christmas trade too. Sadly, this has not come to fruition.


The unfortunate reality is that government initiatives to date have not provided enough financial support for the hospitality sector to stay alive. The extension of the Coronavirus Job Retention Scheme until March 2021 has been a huge help for businesses, but with many in the hospitality industry having to pay large rent and rates bills, and the prospect of having to begin repaying bounce back loans and deferred tax liabilities in 2021, the future looks bleak.


BBR has spoken to some business owners involved in the hospitality industry who have suggested that they, like many, are simply waiting to see what happens next year. It is widely acknowledged by the industry that trade in January and February will be slow, as it always is. Even if the hospitality industry can re-open fully come March/April, these businesses will massively be on the back foot.


Why is it dangerous to wait and see? I’m afraid the answer to this raises more questions;


What happens when the temporary freeze on statutory demands, winding up petitions, wrongful trading provisions, landlord’s right etc comes to an end in 2021?


Will those businesses end up facing significant creditor pressure? Will they have to consider their restructuring or insolvency options in any event?


What are the implications for directors of an insolvency company which has benefited from government backed initiatives? We touched on this in a recent blog, but there is still no black and white answer.


2020 has been a strange and confusing year for us all. Unsurprisingly, the number of business owners seeking advice from insolvency professionals in 2020 is low compared to previous years. This is because businesses are simply ‘hanging on’ to see what the future has in stall. However, speaking to an insolvency professional now is more important than ever. All discussions are discrete and, if anything, means that business owners clearly know what their options are as they enter 2021.


If you or any of your clients operate in the hospitality industry (not forgetting suppliers who have been effected also), please do speak to us. Even if its reassurance you need; we are here to help!

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