Due to the UK rail strikes next week, pubs and restaurants have suffered a collapse in Christmas party bookings.
Industry chiefs believe that the plunge is as bad as last year when cases of the Omicron variant of Covid 19 surging hit hospitality firms in the run up to Christmas.
Kate Nicholls, chief executive officer of the trade body UKHospitality, said businesses reported cancellation rates of as much as 30%, which could cause a 1.5 billion black hole in revenues.
Network Rail has warned passengers not to travel if necessary on those dates.
Nicholls told Bloomberg that if you write off next week, you might write off the week after, because you're getting into omicron territory. It's going to be an early Christmas shutdown. The hospitality sector is already reeling from rising energy costs, staff shortages and falling bookings, leading UK restaurants to go bust at a faster rate than during the Covid crisis.
Rebecca Dacre, a partner at Mazars, said restaurant insolvencies are happening at a much faster rate than during Covid. It is a toxic mix of rising input costs, rising finance costs and weak demand. This combination of negative factors has never been seen before by most restaurateurs. Industry lobby groups, including the British Beer and Pub Association, said last month that more than a third of hospitality businesses could go bust by early 2023.
The industry experienced a rebound in business this summer after a string of forced closures during Covid lockdown periods, but restaurants are struggling with surging inflation, which has not only increased the cost of energy, food and drinks, but also means their customers have less money to spend on going out.
More than half of Britons are planning to cut down on essential spending, raising concerns about revenues from the Christmas period when many businesses make the bulk of their profits, according to Barclaycard.
Some firms are struggling to recruit enough employees due to the post-Brexit rules on migration that prevent EU citizens from working in the UK. Mazars said the combined pressures were likely to spell a tough few months for the industry, despite the usually lucrative holiday period.
The Christmas trading period is usually a bumper period for hospitality businesses. Restaurants will be bracing themselves for a very tough winter and many will have a real battle to keep afloat, Dacre said. There is a certainty of further insolvencies if they don't get much support from the government, but the chances of the government turning on the taps is low.