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UKHospitality calls on government to bail out operators hit by coronavirus

10 March 2020 by

Hospitality is on the frontline of those being hit, says UKHospitality, in a call for suspension of business rates until the crisis is over

As the coronavirus outbreak keeps customers away from restaurants and industry confidence plummets, UKHospitality chief executive Kate Nicholls has called for the government to bail out operators ahead of 1 April's "pinch-point", when many will face huge bills, including VAT, PAYE and quarterly rents, compounded by an increase in the National Minimum Wage.

Speaking to The Caterer, Nicholls said: "There has been a significant reduction in footfall since the government announced its action plan. Our members are reporting a 30% drop. Bookings are also down 50% for the next two to three months. This is a really serious reduction.

"Hospitality is already feeling the effects of coronavirus – it is on the frontline of businesses being hit. The government needs to acknowledge this and provide us with support."

Specific measures that UKHospitality is calling on the government to implement in a response to the crisis include: a business rates exemption for at least three months; quarantined areas to have business rates abolished for the period of non-trading; and business payment delay to ease cashflow (ie, on VAT, PAYE and duty).

How coronavirus is affecting the industry

Hotels

Joss Croft, chief executive of UKinbound, said it has have urged members to be lenient in regard to cancellation policies and expected a huge "pent-up" demand for travel to the UK once the impact of the virus improves.

He told The Caterer: "This is a very stressful and worrying time for the UK tourism industry and travel and tourism worldwide. Many of our members have been massively impacted by Covid-19 and the real worry is that businesses could go under if this situation continues and there are minimal bookings for the normally busy spring and summer months."

The one positive for the UK hotel industry is that people are understood to be cancelling holidays to overseas destinations that have been hardest hit by the virus and booking breaks in the UK instead. Yet operators are still feeling the pressure.

Danny Pecorelli, managing director of Exclusive Collection told The Caterer: "You have the perfect storm – a huge increase of below-the-line costs and a reduction of top-line income." He confirmed that cancellations for March, April and May were "significant".

Restaurants

Many restaurant businesses have already been hit by poor sales due to ‘dry January' and the wettest February on record. Jonathan Downey, co-founder of London Union, reported that visitor numbers were down from 1,600 to 600 at street food market Dinerama in Shoreditch last Thursday – a figure he also attributed to wet weather. He said that while last weekend's figures "weren't back to normal" they "weren't far off".

Downey said in his experience, HMRC had been "very open" to payment postponements during the financial crisis of 2008. "Even two months of this will kill a lot of businesses – 10% could easily go under." He urged operators not to give up: "Get the right advice. You can get through this."

By contrast, according to the Barclaycard Spend Index, while spending in restaurants fell by 6.4%, takeaways and fast food spending rose 8.7%, with Brits opting to stay at home.

Esme Harwood, director at Barclaycard, said: "Storms, floods and fears about coronavirus have kept many Brits away from the high street this month."

Foodservice

Foodservice operators have been calling for the industry to work together. Speaking to The Caterer, Terry Waldron, executive director of independent hospitality caterer CH&Co, said: "We're working closely with our suppliers to understand their challenges, particularly in the fresh food category, and we'll adapt accordingly, wherever possible, to ensure supplies are used.

"We're also collaborating with our clients to understand their plans and to align our response to minimise the impact on their businesses, as well as our own. Communication is key. We have engaged our business continuity and crisis management plans and we're keeping our clients updated with regular communications on the latest developments."

Photo credit: Shutterstock

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