How could Omicron impact your small business?

The Omicron variant of COVID-19 has been spreading across the UK, we've taken a look at the potential impact

Our experts

Startups was founded over 20 years ago by a multi-time entrepreneur. Today, our expert team of writers, researchers, and editors work to provide our 4 million readers with useful tips and information, as well as running award-winning campaigns. Our site is governed by the Startups editorial manifesto.
Written and reviewed by:

It hasn’t taken long for Omicron to become far more than just an obscure letter of the Greek alphabet.

It is of course the name given to the latest variant of COVID-19, which is believed to spread much more quickly than previous variants, and has already led to UK governments implementing new restrictions on things like mask wearing and international travel.

Omicron has also already had an impact on public confidence, with a number of firms shelving Christmas party plans and many people no longer feeling comfortable to go out and socialise.

This is causing immediate challenges for travel, tourism and hospitality companies, and the long-term impacts are harder to predict – there’s still a lot we don’t know about Omicron.

Let’s take a closer look at the impact Omicron has already had and  try to assess the longer-term impact.

Omicron impact on travel and tourism businesses: Red list and more testing affecting bookings

A few weeks ago, things were, finally, starting to look up for the UK’s beleaguered travel and tourism sector.

Vaccination levels continued to rise and people were finally going on holiday again; all foreign countries had been removed from the red list that required mandatory quarantine and transatlantic travel had been reopened.

The spread of Omicron, however, changed all that.

Two key restrictions were announced:

  • The red list was reintroduced and populated with 11 African countries (with Nigeria, South Africa, Namibia and Zimbabwe arguably the most notable inclusions)
  • Travellers to the UK were once again required to have a negative PCR or lateral flow test in the two days before departure, and to self-isolate until they tested negative on a private PCR test in the two days after arrival in the UK.

While the first measure had some impact, the addition of more testing was far more wide-reaching. Holidays instantly became more costly and some bookings were cancelled as a result.

All this has led industry body Abta (the Association of British Tour Operators) to call for more government support to stop travel businesses going under.

Without help, Abta warned, these latest restrictions could “tip companies over the edge” and cited its own research that employment across the travel industry had halved since the beginning of the pandemic, and that this year’s summer and autumn bookings were only 28% of 2019 levels.

Any significant reduction in passenger volumes over the usually lucrative Christmas period could be a blow that some travel and tourism SMEs simply wouldn’t be able to recover from.

Omicron impact on hospitality: Cancelled parties and lower public confidence

Aside from changes to travel rules, the other big restriction the government implemented in response to the spread of Omicron was to reintroduce mandatory mask wearing on public transport and in shops.

While this measure didn’t specifically impact the UK’s hospitality businesses, it sent a clear message that Omicron was something the population needed to be worried about. Some individuals and companies cut down on socialising as a result.

For many, that meant no office Christmas party. A survey of 2,000 office workers by COVID-19 testing business Prenetics found more than half of employers had cancelled the traditional seasonal get-together.

Whether this means people will simply meet up in smaller groups instead is unclear. Some people will doubtless press ahead while others exercise more caution and cancel their plans.

Meanwhile, the Prime Minister Boris Johnson and Health Secretary Sajid Javid have encouraged people to go about their business more or less as normal, while other influential advisors and civil servants have adopted a more restrained approach.

This confused messaging hasn’t helped businesses or individuals, with neither group able to have much confidence in the “right” way to proceed.

Research from industry body UKHospitality found festive bookings were down 12.4% on average and, more worryingly, nearly a quarter (22%) of respondents said that even prior to Omicron, festive bookings were more than 30% below expectations.

Industry insight – “Each cancellation or no show represents a loss of around £70”

The CEO and co-founder of restaurant experience management platform Superb, Zaedo Musa, shares his insight on how restaurants could be affected by Omicron disruption during the festive period.

Zaedo Musa - Superb

Zaedo Musa, Superb CEO and co-founder

Christmas is a crucial time of year for the food and beverage sector and this year is no exception, as many restaurants look to make up for business lost as a result of the pandemic. Across Northern Europe, where we have seen the effects of the Omicron variant beginning to have an impact, there has already been an increase in cancellations over the Christmas period of around 15%. While this may not sound like a lot, each cancellation or no-show represents a loss of around £70 (82 Euros), at what can be the busiest time of year for hospitality, meaning these losses soon stack up.

There has never been a more crucial time to support local restaurants that are often the hub of local communities. Having seen the ingenuity with which many restaurateurs responded to lockdown, we can maintain some optimism that the food and beverage industry will continue to find ways to adapt to the unpredictable circumstances.

Overall, most hospitality businesses are likely to suffer from some sort of hit due to Omicron but the impact will vary according to what type of business they operate and the demographics of their clientele.

Broader impact: Could Omicron pause or stop the UK’s economic recovery?

There is some evidence that the threat of Omicron is already impacting consumer behaviour.

Analysis by retail experts Springboard found that footfall in Central London office areas fell by 2% in the week prior to 6 December, while footfall in large cities outside the capital declined by 3.8%.

This could indicate Omicron is dissuading some people from going into crowded areas and offices.

Just this week the Confederation of British Industry (CBI) cut its forecasts for economic growth due to higher costs for businesses, supply chain challenges and staff shortages. And it further warned that the emergence of the Omicron variant could see its growth forecast reduced still further.

Rain Newton-Smith, CBI Chief Economist, said: “We expect a pretty firm economic recovery ahead, though understandably the emergence of Omicron poses another downside risk to our forecast.”

So the real threat to the economy could be another lockdown. The government’s published Plan B COVID-19 strategy – to be implemented when more serious restrictions are required to stop the spread of COVID-19 – sounds an awful lot like one, with mandatory mask wearing, COVID certification and work from home guidance.

Past experience, however, suggests there would have to be some pretty compelling evidence in terms of the number of deaths or serious illnesses for the government to take that step.

Outside England, the official guidance in Scotland, Wales and Northern Ireland is that people should be encouraged to work from home.

Until much harsher restrictions are introduced in England, it seems unlikely that Omicron will have a major impact on the UK economy.

Written by:
Alec is Startups’ resident expert on politics and finance. He’s provided live updates on the budget, written guides on investing and property development, and demystified topics like corporation tax, accounting software, and invoice discounting. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, and writing a wide variety of freelance pieces.

Leave a comment

Leave a reply

We value your comments but kindly requests all posts are on topic, constructive and respectful. Please review our commenting policy.

Back to Top