More than half of FTSE-listed travel and leisure companies have already issued profit warnings citing the impact of Covid-19 according to EY analysis.
In total, 39 FTSE travel and leisure profit warnings "specifically blaming the impact of Covid-19 for a material downgrade in profit expectations" have been issued so far this year.
One in six of the total number of Covid-19-related profit warnings issued in the UK in 2020 have been from companies in the FTSE’s travel and leisure sector.
"Covid-19 has profoundly affected businesses’ ability to plan and forecast, driving a significant rise in profit warnings, which are currently being issued at an exceptional rate," said Christian Mole, EY UK and Ireland’s head of hospitality and leisure.
"Indeed, almost all listed hotel groups have officially withdrawn guidance for 2020. While there is extensive information on recovery times from previous downturns, the unique nature of the Covid-19 economic shutdown means these aren’t reliable guides, making forecasting particularly difficult."
Mole said the immediate priority for businesses had been to deal with cash flow issues; he and hailed the government’s "critical" job retention – or furlough – scheme, as well as the various tax and business rates reliefs outlined by the Treasury, including the Coronavirus Business Interruption Loan Scheme.
However, he said there remained concerns around response times and some of the conditions of the loan scheme, as well as the "willingness and ability" of landlords to support businesses through rental holidays and deferrals.
"The past month has been exceptionally tough, and the recovery timeline remains uncertain," said Mole. "There is likely to be a more gradual recovery in hotel demand. A longer-term concern must be the impact on business travel and conferences, a major driver of hotel occupancy.
"Given the recent experience of extended reliance on video conferencing, we’ll need to see whether this decreases the need for physical get-togethers in the future."
