London hospitality sector closes due to advance of omicron

Ómicron resists the 4 main vaccines, according to study 0:46

London (CNN Business) -

As the omicron variant of the new coronavirus sweeps the UK, raising daily infections to their highest on record, British businesses are closing their doors again, but not on government instructions.

Restaurants and other venues are deciding they have no choice but to close early for Christmas due to the flood of canceled reservations and concerns for the health of employees.

Ferhat Dirik, co-owner of the Mangal 2 restaurant in east London, said he had decided to close a week earlier than planned due to lost bookings and "general uncertainty in the air."

"It's affecting staff morale, and it's affecting us in projecting any reasonable income that might justify this," Dirik told CNN Business.

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The closures are a new threat to the economy and a headache for the government, almost two years after the pandemic.

They indicate that when cases are high enough, people are still willing to avoid going out, despite widespread fatigue from the pandemic.

Although the government has not restricted social activity, England's Director of Medicine Chris Whitty has advised people not to meet with other people unless absolutely necessary.

However, unlike previous waves of covid, state support for businesses has declined, leaving the hospitality industry to fend for a crucial period.

Lobbyist UKHospitality estimates that its members make a quarter of their annual earnings at Christmas.

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"In this December period, companies are already reeling under the burden of debt incurred by the pandemic and are facing increasing costs overall," Kate Nicholls, UKHospitality director, said in a statement.

"If traders can't trade profitably over the next month, many just won't survive."

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Close "stealth"

UK Economy Minister Rishi Sunak shortened a trip to the United States on Thursday due to the deterioration of the situation in his country.

"I understand the concern of companies at this time, given everything that is happening. That is why I have been in contact with the leaders of the hospitality sector, my team has organized round tables and has spoken with them," he told Richard Quest from CNN.

But Sunak offered no hint of support for the hospitality industry beyond existing measures, such as lower sales rates and taxes on local businesses.

"I think it is important to recognize, as the prime minister said today, that the situation is very different from what we have done and encountered before. The government is not telling people to cancel things. It is not closing deals," added Sunak. .

The timing is making things worse for everyone.

People who had planned to go out to dinner or a drink are giving up because they don't want to risk spending the holidays sick or isolated, rather than with their families.

According to OpenTable booking data, UK bookings plummeted 24% on Tuesday and 22% on Wednesday compared to 2019. Globally, bookings fell 18% and 15% respectively.

Personnel working in the industry are also concerned about rising levels of infections among their colleagues.

"The main reason was the team. We didn't want anyone else to get sick," said Bash Redford, the co-owner of Forza Wine in south London.

Redford said that by Sunday night, two people from his team of 31 had fallen ill with Covid-19.

By Wednesday morning, eight had contracted it, and Redford decided it was necessary to limit the risks for the rest of the workforce.

Forza Wine announced that it would close from Wednesday through Christmas.

Restaurants are not the only ones facing a crisis.

In a statement Thursday, the London Theater Society warned of a "difficult situation" across the country.

Although ticket sales remain strong for the Christmas period, show cancellations due to cast and crew illness, compounded by covid-related requests for reimbursement and audience changes, are creating an increasingly bleak outlook for locals for the next crucial weeks, "the union said.

The United Kingdom reported a record high of 88,376 coronavirus cases on Thursday.

Public health authorities warn that cases of the delta variant "remain relatively stable in number", while those of omicron "are increasing very rapidly."

In London, it is already the dominant variant.

Until now, Prime Minister Boris Johnson has avoided setting more severe restrictions, instead encouraging people to work from home as much as possible, ordering the use of masks, and demanding proof of vaccination or a negative covid test. -19 to get into clubs and major sporting events.

Johnson, whose party just suffered a shocking defeat in the midterm elections, said on Thursday that instead of "shutting things down", the UK government is asking people to "be prudent" and "think about their activities. heading into Christmas ".

But it faces criticism from the hospitality industry, which sees this approach as tantamount to imposing a "stealth shutdown", this time without financial support.

"It's another big blow to the industry by sending these mixed signals, telling people not to go out to dinner, but without offering any guarantees to businesses," said Mangal 2's Dirik.

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Another economic blow

Paul Donovan, chief economist at UBS Global Wealth Management, said this "voluntary collapse in entertainment and services" before Christmas could have a major effect on the economic recovery, which was already stalling as inflation rose.

The UK's gross domestic product only grew 0.1% in October, and production is still 0.5% below its pre-pandemic level.

"This time there is no help from the government, so there is an impact," Donovan said.

A big question in the short term is whether restaurants that decide to close ahead of schedule will continue to pay staff.

If not, workers "will suffer a sudden decrease in income," Donovan said.

Mangal 2 continues to "study the options" while weighing "what is morally correct as well as financially viable."

Redford said that Forza Wine staff will be charging this month, and that there is enough cash to ensure that they will also charge in January and February.

However, after that, the picture turns dark.

• ANALYSIS |

  The battle against the omicron variant brings delicate questions for a tired country

Ultimately, the magnitude of the economic hit will largely depend on how long people focus their spending at home rather than on activities like dining out, Donovan said.

That will depend both on the measures the government takes and the course of the virus.

The good news, he said, is that companies have been through this before, and they have processes to sell takeout and deliver meal kits.

If they have to take this path again, restaurants and bars will have lower costs to do so.

But for now, with coronavirus cases on the rise and another holiday season marred by the pandemic, the mood is bleak.

"People are very scared," says Redford, who planned to open two new stores in 2022. "Very, very scared."

- Walé Azeez contributed to this report.

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