Homeworking costs London’s hospitality sector £2.3bn in lost lunches and after-work drinks

Already hit hard by Covid-19, London’s economy could see a huge knock-on effect from people continuing to work from home after lockdown.

The widespread shift towards homeworking as a result of coronavirus has “sucked the life out of many central locations”, according to Pablo Shah, a senior economist at the Centre for Economics and Business Research (Cebr).

Google mobility data shows that at the peak of the lockdown in April, the number of people going to places of work on weekdays in London was 77% lower than before the crisis. More people were going out to work by June, but numbers remained around 60% lower than the benchmark period of 3 January – 6 February.

Based on the Google data and the average spending by employees near their workplaces of £202 per month — including lunch, after-work drinks, coffee/tea, snacks, stationery and other office equipment — Cebr calculates that the pandemic resulted in £2.3bn of spending in shops and food/drink establishments near London employment hubs being lost or displaced between March and June.

The economics consultancy has estimated previously that when the ‘new normal’ emerges in 2021 it is likely that 30% of employees in London will still be working at home on any one day, compared with only 11.9% of employees before the crisis.

“Scaling from this, the capital will continue to lose out on around £178m per month compared to what was previously spent by employees near their places of work,” Shah said.

And if employees and businesses are driven away by London ceasing to be “fun”, the effect on the capital’s GDP could be many times more, he concluded.

Many Scottish shops and hotels at risk of going under, R3 report claims

Hundreds of retailers and hoteliers in Scotland are at risk of going out of business in the next 12 months, a new report claimed today.

Business recovery organisation R3 said that there was a “high risk” of failure for 274 retail businesses and 30 hotels in Scotland. A further 1,238 retailers and 137 hoteliers are vulnerable to failure over the same period. This means that more than a quarter of shops and nearly a fifth of hotels across the country are at some risk of failure in the next year.

The retail sector is suffering from a lack of consumer confidence as well as changes in way people buy products. The ongoing shift to online shopping is impacting retailers, many of which have not effectively moved online, Scottish R3 spokesman Iain Fraser said.

Retailers that fail to respond to the changes in the sector will cease to exist, he warned.

Compounding the problem of changing retail conditions is the poor state of the economy. Consequently, retailers offering niche or non-essential products will struggle until the economy recovers.

Meanwhile, the hospitality sector also remains vulnerable to the economic gloom because consumers can cut back on their leisure travel and business travel remains subdued. Fraser commented that hotels face the challenge of maintaining reasonable occupancy levels without heavily discounting room rates.

He believes the high capital costs involved in the hotel sector make it likely that many hotel businesses will continue to go under until the market recovers.