Profit warnings issued by FTSE travel and leisure companies fell to their lowest level in seven years in 2021 despite the sector experiencing another challenging year, according to EY-Parthenon’s latest report.

In total, the sector, which includes restaurants and bars, issued just 11 profit warnings in 2021, from 16 per cent of the sector.

This compares with the record 74 profit warnings issued in 2020 in the height of the pandemic.

The low level of profit warnings reflects the impact of record earnings downgrades in 2020, but also the positive impact of certain government support measures and how well businesses in the travel and leisure sector have adapted over a year which began with a lockdown and ended with the Covid-19 Omicron variant.

Meg Wilson, turnaround and restructuring partner at EY, said: “Despite a challenging year, which included continued travel restrictions and reduced air passenger numbers, the travel industry has shown remarkable resilience.

“Looking ahead to 2022, pent up demand for summer holidays, record levels of personal savings and a rebalancing of consumer spending from products to experiences should support a much better year ahead for international leisure travel.

“However, there are still hurdles to overcome.

“While the UK is further relaxing obstacles to travel, variability in destination markets remains.

“There is uncertainty surrounding the timing of bookings and the extent of business travel reductions, which will result in different recovery speeds across the sector.

“Margin pressures also haven’t gone away and the pass-on of costs may become harder as the cost-of-living squeeze intensifies.”

The hospitality sector also faced continued staffing problems in 2021 with an average seven vacancies for every 100 employees.

Brexit’s impact on the labour market, combined with furlough and growth of opportunities elsewhere, especially in retail and logistics, has increased competition and left some companies struggling to adapt.