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At midnight last Sunday, English nightclub owners were welcoming the first partygoers through their doors in almost 16 months. Just 17 hours later they were issuing statements of outrage as the government announced that clubs would have to check customers’ Covid status come the end of summer.
Nightclubs and other indoor venues “where large crowds gather” will only be allowed to serve guests who have been jabbed twice or can prove a negative Covid test from the end of September, the government said.
Michael Kill, chief executive of the Night Time Industries Association, called the move “an absolute shambles”. Kate Nicholls, chief executive of UKHospitality, said it was a “hammer blow” for the suffering industry.
Several operators said it was yet another instance of nightclubs, that would usually throb with young people on tightly packed dance floors, being singled out after more than a year of no trade at all.
With the exception of some test projects, nightclubs and large-scale events were the only businesses to have been legally forced to close for the entirety of the pandemic. The industry makes up a significant portion of the UK’s night-time entertainment and hospitality industry, which generates at least £66bn annually and accounts for 8 per cent of the country’s employment, according to the NTIA. It also feeds a network of 1.3m freelancers and suppliers.
Beyond the grants, loans and furlough given to maintain the hospitality industry as a whole, nightclubs have received no specific state support.
Monday was the first full night clubs had been able to trade since March 2020, although several opened at midnight on Sunday to queues of young people waiting to get in.
“I think it’s hard for someone who hasn’t been in a business to understand the emotional excitement of being able to do your profession after not being able to trade [for that long],” said Luke Johnson, the hospitality entrepreneur and chair of Brighton Pier Group, which operates nine bars and clubs, three of which it has disposed of during the pandemic.
BPG managed to run two clubs as restaurants but, according to its latest financial report, these only achieved £700,000 in sales in the six months to the end of December, 11 per cent of the total during the same period in 2019.
Aaron Mellor, managing director of Tokyo Industries, which runs 45 late night bars and clubs in the UK, said the cash burn had been “absolutely horrific”. The group fell from £5m in earnings before interest, tax, amortisation and depreciation in 2019 to a loss of £4m last year.
The most painful moment was when the government delayed the reopening of clubs from June 21 to July 19. “In that period we had 220 nights sold out that would have brought in £1.2m ebitda,” Mellor said.
Peter Marks, chief executive of Rekom UK, the UK’s largest nightclub operator, said that across its 47 clubs it took £650,000 on Monday — about six times as much as a normal Monday in summer — and that 60 to 70 per cent of its 30,000 customers were first-time clubbers.
But the recovery could prove shortlived.
If Covid “passports” were introduced in the autumn, pitting nightclubs against pubs, business would “drop off a cliff”, Marks warned.
Rekom UK, previously known as Deltic, was sold out of administration in January to the Danish company Rekom for £10m, which Marks said was a fraction of what the company should have been worth. In 2019, the group made a pre-tax loss of £16.5m on revenues of £101.8m.
The hit from Covid passport checks might make Rekom’s new backers “less supportive” of the UK business, Marks added.
A government spokesperson said: “We reserve the right to do what is necessary to protect the public and reduce transmission, including mandating Covid certification in certain settings”.
Operators are mulling a legal challenge to the government’s proposal, with several warning that checking Covid status will be difficult to implement and cause friction at the entrance.
Bradley Thompson, managing director of Broadwick Live, which owns the London megaclub Printworks, said that even if certificates were not required, the announcement they might be had already affected sales. While 5,000 tickets for Printworks’ opening weekend in September had sold in 22 minutes when they were put on sale in March, ticket sales for events that had been released this week had been “super, super slow”.
Mellor said he was hoping for strong trade during the summer despite it traditionally being a quiet period for clubs.
“With people not travelling I’m hoping it will be buoyant . . . [This week is] significantly up so far on 2019 but the true test will be the weekend,” he said.