Covid Scotland: Bankruptcy warnings as hospitality businesses face Christmas party cancellations

Restaurants and bars are warning of mass bankruptcies in the New Year as office Christmas parties are cancelled across Scotland over fears of the new Omicron variant.

The hospitality industry has warned that cancelled office parties could hit businesses hard.
The hospitality industry has warned that cancelled office parties could hit businesses hard.

Hospitality venues say they are being told by companies that corporate Christmas celebrations will no longer go ahead amid concerns that the new variant could be more transmissible and evade vaccines.

The sector, which has already suffered multiple lockdowns, has warned that mass cancellations could result in many businesses going bankrupt in the New Year, amid a “financial tsunami”.

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Many workers had hoped that this year’s traditional Christmas parties could go ahead, with many having booked tables at restaurants, or planning to host events in bars and nightclubs. However, the new variant is worrying scientists, who say it will be a few weeks before the impact of the mutations are clear.

Jason Leitch, Scotland' s national clinical director, has said people should not cancel office Christmas parties this year but urged workers to take precautions such as lateral flow tests before they go out.

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Stephen Montgomery, spokesman for the Scottish Hospitality Group (SHG), said businesses were already receiving cancellations from companies reluctant to encourage widespread staff socialising. The organisation is promoting a campaign to keep revellers safe by encouraging people to take a lateral flow test before they visit a bar or restaurant, under the hashtag #flowandgo.

He said: “There are reports coming in of cancellations. It is the fear factor. Anything that happens like this, the impact of a new variant, or a rise in cases, then companies jump on it very quickly. We want people to enjoy a really good Christmas and they can do that by following measures such as wearing a face mask and taking a lateral flow test.”

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The festive period usually accounts for around 30 per cent of annual turnover for the hospitality industry.

Mr Montgomery said: "We’re already battling and I think, come January, a lot of people will be weighing up their futures. There will be a lot of bankruptcies. We don’t know yet if rates will go back to 100 per cent, minimum wage is going up to £9.50 an hour next year, we are facing a financial tsunami.”

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He said in the short term, that some firms were already redrawing their Christmas rotas to reduce staff numbers.

He added: "Businesses are changing rotas and giving staff less hours and cancelling entertainment.”

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Leah Renton, assistant manager at restaurant Dine Edinburgh, said the venue had already received a number of cancellations from corporate customers.

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She said: “We’ve had a quite a few cancellations already, from some larger parties. Some are maybe offices who are now telling their staff they have to work from home, so they won’t allow them to have a Christmas party any more. It’s going to have a massive impact. We’ve had a lot of these bookings in for months and have had to turn away other people.

"Though we’re usually very busy so we hope that we’ll be able to get some more bookings in. We can only hope that once things are clearer, thing might change.

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"When they said people could go out again we were preparing for things to return to some sort of normality, then it hits you all over again.”

Sarah Copeland, manager of cafe and outside catering group Milk in Edinburgh, said that many early bookings for catering had been for smaller lunchtime gatherings in offices, rather than large scale evening parties – but warned that new business had slowed in the past week.

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She said: "There’s been a slowing down of taking bookings, but we haven’t had many actual cancellations yet. We’d been gearing up for a busier season and it was all looking really good, but this has slowed things right down and it’s not picking up in the way we thought it would [since the emergence of the variant]. It’s been a bit disappointing. So far we haven’t had any major cancellations, but we’ll have to see.”

A poll of 2,000 UK adults, commissioned by hospitality job board Caterer.com, found that half of under 35s – and a quarter of people overall - are scaling back on big parties in favour of multiple smaller gatherings in a bid to avoid unnecessary social contact.

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Many large companies in Scotland have opted not to organise large Christmas parties this year, but have offered guidance to employees opting to socialise privately.

A spokeswoman for Royal Bank of Scotland said that individual teams were making decisions on whether parties would go ahead.

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She said: “Participating in any event in person is entirely down to individual choice, but we are reminding our colleagues that government guidance must be followed at all times and we recommend taking a lateral flow test before joining any social event.”

Lorna Boyer, of events firm Eventurous, said that some firms were switching to online parties.

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She said: “We're seeing the same trend across the UK, not many cancellations as businesses are still seeing the value in rewarding employees after a tough couple of years, but we are seeing some business switch to virtual Christmas parties and virtual party enquiries have almost doubled over the past week.”

Earlier this week, the UK Government’s Work and Pensions secretary Therese Coffey said that people should avoid “snogging under the mistletoe” to stem the spread of Covid.

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A recent Survation poll found that 35 per cent of office workers say they are less likely to kiss someone at the Christmas party because of Covid – while 13 per cent of firms have actually banned physical contact between staff at festive gatherings.

Maddy Alexander-Grout, chief executive at MY VIP Rewards, said: "Hospitality has been one of the hardest hit sectors during the pandemic, and news that Christmas parties and festive events are being cancelled around the UK at scale is a devastating blow.

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"Our pubs, bars, hotels and restaurants needed this Christmas more than ever but they have been blindsided by the Omicron variant.”

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