According to the latest quarterly review of UK profit warnings from EY, the travel and leisure sector has received more profit warnings than every other FTSE sector in 2020.
In the nine months to the end of September, leisure companies released a record-breaking 63 profit alerts - almost triple the amount EY posted during the whole of 2019, a total of 23.
In that time, some three quarters of the industry issued a warning, with 95 percent of those citing the impact of Covid-19.
The EY study found that the restaurant and bar sub-sector profit alerts (25) were more than four times higher in 2020 than in 2019 as a whole (25) (6).
Meg Wilson, transformation and restructuring strategy partner at EY UK, commented: "Covid-19, both operationally and financially, has hit the travel and leisure sector extremely hard."
The industry has done a fantastic job of putting people first including protecting clients and workers, but even the best corporations face difficult choices.
The industry continues to be seriously hammered by ongoing local and national constraints and volatile demand.
"We have already seen a number of permanent closures, insolvencies and distressed sales among companies facing pre-existing problems, such as overcapacity.
"The larger the pandemic's grip, the deeper the economic downturn and the longer the road to recovery."
In the period to the end of September, the FTSE leisure sector provided the most alerts, followed by retailers (49), industrial support services (49) and the media (49) (35).
Wilson added:' Cash management remains a priority for companies to thrive, and government help will continue to be required for some time.
In order to meet rapidly evolving market trends, businesses would need to transform their business models quickly in order to be more agile.
The recovery will require some big sector-wide restructuring, including resetting the cost of capacity and land, as well as tackling excessive borrowing.
Before Covid-19, the restaurant industry was already struggling with overcapacity problems and we now expect to see a further decline of around 20-25% of branded restaurants.
Reduced demand for business travel would also entail repositioning and future redevelopment for alternative use of several hotel sites.
"Those who have the flexibility to cope with this ongoing storm, and are able to reshape it will find significant growth and consolidation opportunities."
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