RESULTS from major drinks and leisure companies in recent days offered a rare flicker of hope for those keen to see the hospitality sector bounce back from the darkest days of the pandemic.

C&C Group, owner of Tennent’s Lager, pub giant JD Wetherspoon, and Hostmore, the company behind the Fridays cocktail bar chain, offered evidence that the industry is seeing signs of recovery from the tightening of restrictions that followed the emergence of the Omicron variant in November.

Dublin-based C&C declared it had seen “positive trading in the on-trade” following the easing of restrictions last month, while Wetherspoon noted an “improving trend” across its 850-plus pubs in the three weeks to March 13. Hostmore, which is led by Scottish hospitality industry veteran Robert Cook, underlined its appetite for acquisitions as it unveiled its maiden results to the stock market.

This more optimistic sentiment followed sharply on the heels of an extremely difficult period for hospitality. The restrictions quickly ushered in to combat Omicron vanquished trade in the run-up to and during the all-important festive season. With people in Scotland urged to avoid Christmas parties, the hospitality industry was hit by a wave of cancellations estimated to have resulted in around £1 billion of lost revenue.

READ MORE: Scott Wright: Ukraine crisis sparks new questions for Scottish business

The subsequent easing of restrictions in February, however, brought with it a welcome recovery in fortunes for the sector, which is once again demonstrating its ability to bounce back quickly.

There clearly remains strong demand among Scottish consumers for enjoying the on-trade, which is perhaps not surprising given the long spells of lockdown people have endured since the pandemic took hold two years ago. That people have been keen to spend part of their discretionary income in bars and restaurants is also positive for town and city centres, given the extent to which footfall has, and continues to be, affected by people working from home.

However, just as the hospitality industry shows signs of bouncing back from Omicron, there is a further risk to its prosperity on the horizon. And, even though the pandemic is far from over, it is not Covid that presents the most immediate challenge, but the deepening cost-of-living crisis.

Official figures released yesterday showed that annual UK consumer prices index inflation increased to 6.2 per cent in February – a 30-year high – as the cost of energy, food, clothing and other goods continued to soar, exerting further pressure on already stretched household budgets. And that pressure is set to ratchet up even further in the weeks to come, with CPI inflation forecast by the Bank of England to rise to 8% later this spring.

READ MORE: Scott Wright: What will twist in Stagecoach takeover saga mean for Scotland?

Of course, the effects of rising inflation have been evident in the real economy for some time. People have in recent months seen costs steadily go up across the board, at the petrol pump, in supermarkets (where shortages are now a common sight), and in their energy bills. There are now genuine fears that people already struggling on low incomes are being faced with the stark choice of whether to buy food or heat their homes.

It is an appalling situation for people to be confronted with, with the measures announced by Rishi Sunak in his spring statement yesterday doing little to ease the worries of those who are most vulnerable to the cost-of-living crisis.

And it is not just households that will suffer, it is the businesses that depend on their expenditure too.

For an industry like hospitality, which has already endured so much amid the pandemic, it looks like even more difficult days lie ahead, if consumers find that socialising in bars and restaurants becomes beyond their financial reach.

There are now many pub owners restricting their hours of operation because the level of custom they are attracting does not justify the cost of trading.

Initially, it was the continuing work-from-home directive which meant there was simply not the footfall to justify trading on certain days. Now, with the cost of living becoming ever-more expensive, publicans may also be mulling whether to open on certain days because consumers can no longer afford to visit.

READ MORE: Scott Wright: Sudden exit of boss raises questions about Scotland's investment bank

In these circumstances, it was no surprise to hear Tim Martin, chairman of JD Wetherspoon, criticise the UK Government for pressing ahead with its intention to return the level of value-added tax (VAT) applied to the hospitality industry to 20% in April. This follows a protracted period during which VAT for hospitality has been lowered – it was initially slashed to 5% when the pandemic took hold, before rising to 12.5% on September 30 – to support the sector through the pandemic.

Mr Martin has long argued that it is unfair for VAT to be levied at 20% for food sales in the on-trade when it is effectively zero-rated in supermarkets, and returned to the theme this week, arguing that the policy is effectively harmful to town and city centre vitality.

“Pubs, restaurants and cafes form integral parts of high streets, whereas supermarkets are often in edge-of-town or out-of-town locations,” Mr Martin said. “Favouring supermarkets over pubs is bad for high streets and town centres.”

He added: “Pubs, restaurants and cafes play an important role in the social fabric of the nation, as well as generating employment and vast amounts of taxes for the Treasury.”

When it is considered that supermarkets have been free to trade all the way through the pandemic, while pubs and restaurants have frequently had to close as the crisis has evolved, it is understandable that the hospitality industry has been campaigning vociferously for more support, particularly as the cost-of-living crisis deepens and overheads soar. Due to their huge buying power, supermarkets have long been able to undercut pubs when it comes to pricing, and that advantage will be even more of a benefit now as costs go up and up.

Ultimately, Mr Martin’s words were not heeded by Mr Sunak, who offered nothing new to directly help the hospitality industry when he announced his spring statement.

But perhaps Mr Sunak should give some thought to a proposal from the Scottish Licensed Trade Association. It argues that duty on alcohol sales in pubs should be cut while the tax is simultaneously raised in the off-trade, and cites a paper from think-thank the Social Market Foundation that suggests such a move would be revenue-neutral for the Treasury.

“Are we really suggesting there is to be no more help from government in this situation we are in?” said SLTA spokesman Paul Waterson. “We are not even near the end of this. With the average pub well over £100,000 in debt, how long is it going to take to recoup that? Indeed, are these pubs and bars going to open again? If you are new into the business and you have nothing to fall back on, you might never open again.”

There is certainly no shortage of deserving causes as the UK faces a worsening cost-of-living crisis. But as one of the country’s largest employers, and a big contributor to Treasury coffers, it is a shame Mr Sunak did not provide further support for hospitality yesterday.