The importance of investment for the hospitality sector during these unprecedented times

Over the course of the year, the hospitality industry has felt the true impact of the pandemic and the effects of the restrictions put in place. As lockdown ends and businesses reopen their doors again, many had hoped to get back to normality in time for the holidays to cater for the influx of business the period brings. But, with the new tiered system in place many businesses within the sector have been left with a feeling of uncertainty and unease going into the Christmas period and now face substantial losses as a result of tight restrictions.

The demand for eating and drinking out as a result of lockdown could inject as much as £15.9billion into the economy over the festive season, with many businesses hoping to capitalise. However, according to research from UKHospitality, the harsh new restrictions in place for 150,000 hospitality venues across the country, could mean a £7.8million loss to the industry. In light of the new tiered system affecting many hospitality venues across the UK, investment and an influx of private capital towards these businesses has become imperative in helping them survive the difficult winter ahead.

Pre-covid, there has already been a significant funding deficit that has ravaged the UK’s regions and the casumn of finance has only been worsened as a result of the pandemic. Historically, it has been known that SMEs in the south of the country and around the London area have gotten far better access routes to finance than those in other regions. There is significant pressure on private equity firms, institutional investors and high net worth individuals, to be able to understand how damaging the deficit will be, given that it was already cutting down around nearly 50% of new business growth pre-covid.

Covid has perpetuated an already crippling problem, with the regional funding gap widening to £3.1billion here in the UK, highlighting the disparity of investment throughout the country. Ultimately, resilient businesses around the capital, who are flushed with funding options, will find a way weather the storm, but the entities that will suffer are regional businesses that serve their local communities, but unfortunately don’t have access to the capital. These businesses are central points of regeneration for our devolved economy to grow post-pandemic, and for that reason decentralising funding pots across the UK and away from the capital is of paramount importance.

CEO of IW Capital, Luke Davis:

“Investment into the hospitality industry is proving to be fundamental in helping these businesses weather the storm and survive the new tiered system that many are not sure to recover from. We all need to rally behind these businesses, who now face a huge loss in revenue over the Christmas period, in order for them to make it through to next year.

“Throughout the year, hospitality venues have been hardest hit and with the new tiered system in place, things are looking to get worse. The hospitality industry plays an integral part in our economy and requires additional investment and support to help them during these tough times.

“Most of the areas within tier 3 are those who receive little investment attention. Investors need to start looking outside of London and into the north where there are a number of great investment opportunities within the hospitality sector. Here at IW, we are doing just that with Rockwater in Hove where we have raised a significant amount of investment from the local community.

“Making growth investment more easily available to small businesses within this sector that are looking to grow should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need, and so we hope this will be addressed in the near future.”

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