We may be at the start of a new year, but many hospitality businesses are still feeling the cold, hard grip of 2020 as they remain closed and look towards the future with mixed feelings.
On the one hand, the promise of a substantial rollout of a vaccine over the coming months will provide much needed optimism and a feeling that hospitality could start to return to some sort of normality by the spring. However, a less positive dot on the horizon is the end to the debt moratorium - currently pencilled in for the end of March – which will likely see some landlords demanding money from businesses that they simply don’t have.
As it stands, many businesses face what is being described by some in the sector as a ‘bloodbath’ as rent is demanded from businesses that simply haven’t made any money over the past year because of enforced closures due to the pandemic. While some landlords have been supportive, and deals have been struck in terms of turnover rents, many businesses simply won’t be able to survive the ides of March when the landlords come looking for payment.
The message to the Government is a simple one then: the hospitality sector needs more support if it is going to survive this bleak winter and ensure that the Government’s efforts thus far in trying to protect it haven’t all been in vain.
To the outsider, it might seem like the hospitality sector has already had its fair share of support – thanks to Rishi Sunak’s generous furlough scheme, the cut in VAT, CBILS loans and grants and the aforementioned debt moratorium - but with restaurants and pubs the first to be ordered to close and with no obvious online alternative to offer, the sector has been disproportionately hard hit.
Moreover, much of the Government support has still come at great cost to already struggling businesses, either through merely enabling them to take on more debt or through additional hidden costs. As numerous restaurateurs continue to point out, while furlough has been a vital lifeline for businesses it is not without its costs, with businesses still obliged to pay employers National Insurance and pension contributions while no money is coming through the tills.
As Kate Nicholls, UK Hospitality chief executive and a deservedly new recipient of an OBE in the New Year’s Honours List says: “With the vast majority of the country’s hospitality now unable to trade, we cannot deliver this message to Government loudly enough. The sector has suffered more than any other under Covid and without urgent action we will witness a hospitality bloodbath, losing thousands of venues for good.”
So what can the Government do? Extending the VAT cut to alcohol in hospitality to put pubs and restaurants on a slightly more even footing with the supermarkets would be a good start as well as extending the current VAT cut, as would putting in place proper workable measures to try and avoid the ticking time bomb between landlords and tenants to ensure that both parties come out of this pandemic in good shape.
Then there’s the petition for a Minister for Hospitality that has received approaching 200,000 signatures and which will be debated in parliament next week. As the UK’s third largest employer, the #seatatthetable campaign argues that hospitality should have a clear and strong voice in Whitehall, a person whose immediate focus would be on navigating it through these choppy waters.
While I have my misgivings about how effective such a role might be – you just need to look at how ministers such as Chris Grayling have ‘helped’ the sectors they have overseen – such a position would reflect the importance of the hospitality sector and could – in the right hands – be a force for good.
What is clear is that more support is needed if the hospitality sector is going to survive this pandemic as it enters its second year. Here's hoping safeguarding the sector was one of Rishi's New Year's resolutions.