By Kunal Sawhney, CEO of Kalkine (www.kalkine.co.uk)
It is known fact that the hospitality and travel industry is one of the worst-hit sectors due to the pandemic and related restrictions in the UK. PM Boris Johnson’s announcement of a phased-out roadmap from lockdown has brought further challenges for the sector.While hospitality businesses are happy that the easing of restrictions will provide them some relief, but many feel it will not be enough to sustain them till May.
Thus, due to the new rules for slowly phasing out restrictions, some of the key sub-sectors within the hospitality industry require specific support from the government to survive until trading restrictions are lifted completely.
RESTAURANTS AND PUBS
The food and beverage industry is one of the largest manufacturing sectors in the UK. But it has been shut since November last year with no business activity for almost 200 days now. With the phased-out re-opening, several establishments are in danger of going bust or unable to qualify for resuming operations in April.
The night-time economy, which includes restaurant, night clubs, bars, and other establishments, employs around 1 million people. Moreover, around 40 firms per week are already going bust due to current trading restrictions and thus form an important part of the re-opening strategy.
According to industry body UK Hospitality, only 40 per cent of businesses have outdoor seating facilities and will be able to operate in April. Moreover, an estimated 67 per cent of businesses are expected to run out of cash before May, according to recent government data.
Immediate government action can provide the sub-sector with the aid much needed at this hour. It can be in the form of:
• A robust financial package.
• Elimination of potential new costs that are expected to emerge, such as loan repayments, HMRC taxes, and other expenditures.
• Acknowledgment by the government that bars and restaurants have been reported to have very low rates of trans- mission and should thus, be fully operational.
The sector has registered pent-up demand owing to upcoming summer holidays. However, businesses must prepare themselves for lower occupancy, which might fall to almost 20 per cent, in the initial phase.
Some actions that businesses can undertake to maximise recovery include identifying areas for increasing cost efficiency and better utilising resources. Moreover, incorporating areas of profitability and ways to remain competitive against chains or other hotels who have previously streamlined and innovated business processes amid the lockdowns.
However, in addition to updating the backend process, the industry will also need adequate government sup- port to safeguard its recovery, especially since the sector is directly dependent on international travel restrictions.
SECTOR SPECIFIC ACTIONS
- Financial support for short-term rentals businesses until all restrictions are removed, including international travel restrictions.
- Recognition of how Covid safe short-term rental properties are due to following strict industry wide protocols.
- Allowance of sufficient notice period for businesses to re-open.A three-week notice is preferable for preparations, building enough demand for guest bookings, and others.
- Clarity in government communications to minimise confusion among businesses and customers.
- Allowing inputs from the industry to formulate the government’s next steps for boosting the industry.
The government’s recently announced review on re-opening international travel provides business confidence in the sector, which is critical to the hospitality sector’s recovery.
While the new roadmap will provide the sector with much-needed clarity and direction, it remains to be seen how the government plans to further support each sub-sector and ensures the hospitality sector bounces back as soon as possible.