News: EY: Dangers remain for UK hospitality sector

UK-listed travel, hospitality and leisure companies issued 90 per cent fewer profit warnings during the first three months of 2021 than they did during the equivalent period in 2020.

However, these companies continue to face a challenging outlook, according to the latest EY-Parthenon analysis of profit warnings.

Between January and March this year, FTSE Travel and Leisure companies, which includes restaurants and bars, recorded only five profit warnings, issued by eight per cent of the sector.

This compares with the record 50 issued in the equivalent quarter in 2020, when the pandemic began.

It is also a decrease on the 11 profit warnings issued in the previous quarter, between October and December last year.

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Christian Mole, EY UK & Ireland head of hospitality and leisure, commented: “The hospitality sector has clearly been one of the most affected by restrictions on social contact, with almost four in five UK FTSE Travel and Leisure companies having issued a profit warning since the start of 2020.

“But restrictions are easing, and the economic outlook is improving.

“Consumers have responded to outdoor hospitality very positively, demonstrating that there is significant pent-up consumer demand.

“However, due to a lack of suitable outside space, only a relatively small proportion of sites have been able to open, and the full reopening of the sector on May 17th will likely prove a bigger test of the balance between supply and demand.”

Despite the decrease in warnings, FTSE travel and leisure is still the sector with the second highest number of profit warnings in quarter one of 2021, behind only FTSE retailers which issued eight profit warnings.

Most FTSE sectors saw significant decreases in profit warning numbers at the start of 2021 as the global vaccines roll out, and the lessons learnt in previous lockdowns, led to improved forecasts.

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