Covid – 19 and the Hospitality Industry

By Ian Cass, Managing Direct- Forum of Private Business

The Covid-19 pandemic has hit our whole economy here in the UK, but one of the sectors hit hardest has been the hospitality industry, in fact the whole nighttime economy where people socialize has been completely devastated by the impact of the pandemic and it will leave huge scars for many years to come. Hospitality, Theatres, Sports, Cinemas, Tourism, and live music venues have all been hit particularly hard. The pub tenants of the regulated pub companies have continued to suffer through paying a premium for products they sell and high rents with little help or relief.

Everyone I speak to seems to agree that we need to keep people safe and healthy, but they are also concerned about the impacts on our businesses and the economy as a whole.

The Government has been dealing with a difficult and ever-changing situation, we have had Cbils Loans, bounce back loans, furloughing, grants, and several regulatory protections put in place. We now have the Chancellors “Job Support Scheme” which is coming at a time when the Furloughing scheme is coming to an end and we fear will lead to more redundancies in the hospitality sector rather than saving jobs. This is because the scheme will only pay out for “viable jobs where the staff member is working at least a third of their hours and so employers are paying while staff are less productive and in many cases in the nighttime economy they aren’t working at all.

The simple fact is that in those parts of the hospitality sector which are open, they cannot serve as many customers as they used to, but they need more staff to do so, so they are working in a less productive manner and in many cases are losing money. The full hours and the “Eat out to help out scheme” helped to cover increased staff costs, but with more staff on reduced hours, they will not qualify for the job support scheme.

So as furloughing is replaced by the job retention scheme, it will be cheaper and more efficient to lay staff off and judging by our helpline calls and the questions being asked by members that is exactly what will happen.

In order to really help the Hospitality Industry Government needs to take the following actions.

1. Take real action on rents, replacing the current voluntary code of practice which the larger commercial landlords are ignoring with a mandatory code that requires landlords to take account of the impact of restrictions and the trading conditions for the individual business involved. Commercial landlords are usually backed by large financial conglomerates, so should be able to secure large long-term loans at low interest rates and if required government can arrange appropriate support for them.
2. It needs to look again at the Job support scheme, putting something in place that supports businesses and retains staff, which is based on hours worked rather than unworked hours.

It needs to ensure the current decision by the courts regarding business interruption insurance is upheld and the insurance companies pay out which will help businesses in the hospitality sector.