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After the floods…

14 March 2014
After the floods…

What next for the hospitality operators that were affected by the winter floods, asks David Harris. And how can you protect your business in future?

Have you become bored with the floods yet? Not if you were affected, you haven't. So if, like the receding news coverage, you have moved on, count yourself lucky.

For the many hospitality businesses that have been hit, there is more than one way to measure the cost of the worst flooding since 2007. Money is the most obvious, with both damage caused to buildings and business lost as a result of closures costing millions. How much is hard to say yet, but PricewaterhouseCoopers has suggested that insurers will be paying out £1bn in total in the UK, compared with £3bn in 2007.

A second factor for flood-damaged buildings is the lost time. Flooded buildings can take months to put right after a major flood and this compounds the lost earnings from the immediate aftermath of the flood itself. Drying out alone can be a lengthy operation. In 2009/10 the Trout hotel in Cockermouth, Cumbria thought itself lucky to be up and running after just seven months (see below). Managing director Sue Eccles says that the speed of that refurbishment helped it to get a lot of business on reopening because it was one of the first businesses in the area to do so.

But she admits that the flooding had an emotional element as well as a practical one. Eccles says: "Of course it was a shock, not least because it hadn't happened before. But we had no choice but to get on with things. We have taken a few extra measures now, such as sealing windows, but in the end there is very little we can do as a hotel for flood defences.

"It is partly the price we pay for being near water, although we do hope that the new defences put in by the town make a repeat situation much less likely."

So how does such a scenario affect bookings? Very badly, according to research by VisitEngland. It found that 10% of consumers were put off taking a trip to affected areas, 26% of businesses say they have had cancellations and 41% have reported fewer advance bookings than normal.

Then there is the emotional damage of a flood and its consequences. You have probably noticed that national media interest in the floods is already waning, but as is so often the case with these things, the consequences for those affected by major events far outlive their presence on our television screens.

The luxury of letting last month's news slip away with a fading memory does not apply to the hotels and restaurants that have found themselves swamped in the last three months.

There is little respite, for example, for the Mercure Boxhill Burford Bridge, in Surrey, which has been closed since Christmas Eve after the River Mole burst its banks. It will remain closed until September for refurbishment.

And there is no respite at all for Reeds Country Hotel in Barton-on-Humber, which also flooded in December after a tidal surge. It has now gone into voluntary liquidation.
In St Mawes, Cornwall, the Idle Rocks hotel says it will remain closed until 11 April because of storm damage.

And in Runnymede-on Thames, close to the site of the signing of the Magna Carta, the Runnymede hotel closed for a week on 8 January because of flooding and closed again in February, although it is now open.

As for the Somerset Levels, they remain stubbornly under water, thanks to a combination of the wet weather and an Environment Agency analysis that concluded that the area no longer needed dredging. This leaves hotels and restaurants in the surrounding area reflecting ruefully that an area that has been successfully drained since the Middle Ages was now being abandoned. Farmers, of course, are not just rueful, but furious.

For hoteliers elsewhere the consequences have gone beyond flooding and even the lengthy repairs needed after flooding. In Worcester, for example, the Severn View hotel, currently closed because of flood damage, had its office burgled in February, and lost several hundred pounds and a laptop.

In short, the consequences of the 2013/14 floods have been notable for being so widespread. The South West, the South East and the Humber have all had their share of difficulty. All operators must ensure that in the midst of their own difficulties, they do not forget to deal equitably with their customers. For example, a hotelier can cancel a reservation without being liable for compensation if the business has been flooded, as it is categorised as an act of God, but it will probably help matters if you make efforts to provide guests with an alternative place to stay or eat.

If a guest cancels a booking because of a general fear of flooding, the proprietor needs to balance the goodwill generated by not imposing a penalty against the cashflow consequences for the business.
Is there any bright side to the floods story? Certainly not for those badly affected, but it does seem there are fewer of them than in 2007. Insurance claims, although still being worked through, are expected to be less than half those in 2007, both in number and amount. Furthermore, the Association of British Insurers says that, unlike with residential customers, it has heard of no cases where businesses in flood-prone areas were being refused insurance.

There is also some government and local authority help available, and organisations such as the British Hospitality Association (BHA) remain a good source of advice on who is offering what and where.

Martin Couchman, the BHA's deputy chief executive, adds that relative to the national total "very few hotels have been directly affected" by the floods and that the BHA has not been besieged by phone calls "unlike the way it was for foot and mouth, for instance".

Couchman points out that even parts of the country that have lost some transport links, such as the railway beyond Dawlish into Cornwall, are still reachable by other means. The BHA's Big Hospitality Conversation held at the Eden Project in Cornwall still attracted 260 people in February, he adds, indicating that very few places are cut off from all forms of transport.

Couchman has the impression that it is pubs that have been hardest hit, as many are close to rivers that have burst their banks. But many of those are so used to flooding that they respond quickly at the first threat.

INSURANCE PREMIUMS

It is an expensive fact that if your hotel, restaurant or pub floods regularly that your insurance premium will be higher.

It is also true that for many, a riverside or a seaside location is a cornerstone of their business. Some old pubs may even be sited next to rivers because they once needed the reliable fresh water supply so that they could brew beer. But the Association of British Insurers (ABI) says that your insurance premium should not rise just because you are close to water.

"If you are next to a river but haven't flooded in 50 years then it shouldn't make a massive difference," says an ABI spokesman.

The ABI also says that it does not know of a commercial premises that has been refused insurance because of flood risk, unlike the well publicised refusals for residential insurance in flood-risk areas.

But the ABI acknowledges that if you do flood regularly, then you will pay more. The price for a view, perhaps.

WHAT TO DO IF THE WORST HAPPENS

If you have been flooded there is some financial help available from central and local government that is intended to soften the blow. Measures include:

  • Businesses flooded since December 2013 will qualify for 100% business rates relief for three months, regardless of how long they were flooded
  • A £5,000 repair and renew grant for all affected businesses to help build in flood resilience when repairs are made
  • An ability to apply for a three-month deferral of VAT, PAYE and council tax payments. The helpline is 0800 904 7900
  • Business support and advice helpline, including a free one-hour phone call with a business support advisor - 0300 456 3565
  • Banking: A commitment of £750m from the major banks to provide support for businesses and individuals affected by flooding
  • RBS has also set up a £250m storm fund, which will provide interest-free loans for three months, limited to a maximum of £250,000. RBS also says it will give repayment holidays on existing small business loans, authorise temporary increases on credit card limits, fast-track overdraft increases and waive early withdrawal fees for access to deposits.

Full details of how to apply for government help are available in a leaflet downloadable at: www.gov.uk/government/publications/flood-support-package-for-homeowners-and-businesses

MEMORIES OF 2009: THE TROUT HOTEL, COCKERMOUTH

For Sue Eccles, managing director of the Trout hotel in Cockermouth, Cumbria, the floods of
the past three months have brought back painful memories.

It was in November 2009 that the Trout found itself assailed by water that came from higher up the river and ran in a 3m deep torrent down the town's main street.

The flood struck just after the Trout had spent £600,000 on refurbishing and it was seven months to the day after the flood before the hotel was able to open again.

The Trout had not flooded before and, counter-intuitively, the water came not from the side facing the river, but from the other side of the hotel.

Eccles, who has been running the hotel for 18 years, is hopeful the hotel will never flood again because a sophisticated glass barrier defence has been installed in the river at the other end of town. It is automatically raised if the water gets to a threatening level.

The Trout's first time experience in 2009 highlights one of the issues for hotels and other premises during the 2013/14 floods: for many it has not happened before, so previous experience is not necessarily a guide.

What is Eccles' advice to those flooded this time round? "Get up, dust yourself off and start putting things right. It's all you can do."

STRUGGLING IN THE SOMERSET LEVELS: WALNUT TREE HOTEL

For hotels on the edge of the Somerset Levels, the UK's most notorious flood site of 2014, it has been a challenging year.

Peter Ball, proprietor of the Walnut Tree Hotel, West Camel, for 26 years, estimates that when the flood was at its worst nearly half the phone calls the hotel received were to cancel bookings.

This was despite the fact that the hotel itself never flooded, even though the village around it did. "We have had to close here and there but only because people could not get to the village," he says.
West Camel (with a population of 400) is about 10 miles from the Levels themselves but seems to be better protected than them because it is just above sea level, as opposed to below it.

The main threat to the 13-bedroom, two-restaurant hotel comes from the River Cam. Unlike the Levels, this is regularly dredged by the Environment Agency and Ball is not among the Agency's critics.

"I think they are doing their best and there is someone here from the Agency nearly every day," he says.

BOOKINGS FALL OFF A CLIFF: LANGSTONE CLIFF HOTEL, DAWLISH WARREN

Langstone Cliff hotel in Dawlish Warren is just 300 metres from Dawlish Warren station, and just half a mile from the breach in the sea wall that has spectacularly interrupted the main railway line linking Paddington and Penzance.

The image of the sea battering this line is perhaps the most memorable of the latest episode of floods and the 64-bedroom Langstone Cliff has had a grandstand view.

For the hotel building itself the weather has not proved too damaging, says Mark Rogers, partner and a member of the family that has run the hotel since 1946.

There have been some lost bookings of those who come down by train, two big trees have toppled in the storms ("fortunately they did not damage anything"), and the lighting on the route to the hotel was knocked out on one stormy night in February. Other than that, not too bad, says Rogers. "We've coped pretty well, largely because we are 100 metres above sea level, so apart from the fallen trees and a bit of water ingress it wasn't too bad.

"What affected us more was the loss of trade from the Midlands and the Home Counties where people who were supposed to be staying with us had themselves been flooded.

"If your house is in imminent danger of flooding you aren't moving, are you?"

All of which demonstrates that hotels do not need to flood themselves in order to lose business because of the floods.

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