Investment in hospitality falls as UK companies look to investors

05-Aug-2021 - Last updated on 05-Aug-2021 at 09:20 GMT

Number crunching: business investment is down analysis has found

Business investment in the hospitality industry halved in Q1 on an annual basis, analysis of the latest Office of National Statistics data by business tax relief specialists Catax has revealed.

It said business investment by hotels and restaurants collapsed 52% (£702m), falling from £1.4bn in Q1 2020 to £649 between January and March. This was a 27.7% fall on the previous quarter and a long way off the sector’s all-time high of £2.2bn in Q4 1997.

It was also dramatically worse than the performance of UK industry as a whole. UK business posted a 16.9% annual fall in business investment across all sectors in the first quarter, dropping an estimated 10.7% on a quarterly basis to sit 17.3% below pre-pandemic levels (Q4 2019).

By comparison, UK GDP shrank 1.6% in the first quarter, down 6.1% year on year and 8.8% below pre-pandemic levels at the end of 2019.

Certainty on investment decisions

Mark Tighe, CEO of Catax, said: “The nation’s pubs have suffered appallingly over the past 18 months. The furlough and ‘Eat Out To Help Out’ schemes were welcome initiatives but the certainty on which investment decisions are based has been in short supply.

“The situation for the pub trade was made worse still by the unpredictability of the pandemic which triggered stop-start reopenings amid repeated lockdowns, which only served to create even greater anxiety for pub companies and staff.

“Against this backdrop, a steep decline in business investment was inevitable but this may be about to change, with vaccination rates the envy of the world and the pubs filling up again. A recovery in these figures will double as a good gauge of how well the sector is bouncing back over the next year.”

Investors analysis

This comes as UK listed companies have raised more than £12bn in new capital from investors in the first half of the year, aiming to secure balance sheets damaged by ongoing Covid restrictions and capitalise on shifting consumer trends, investment bank Goodbody said.

Analysis of London Stock Exchange data on from the investment bank showed that in H1 2021, 357 companies raised new capital. This is down from £17.3bn raised in H2 2020 and £17.0bn raised in H1 2020. However this figure remains well above pre-pandemic levels, averaging £9.0bn each half over the last 10 years

It highlighted the case of Mitchells & Butlers, which raised £351m from investors.