Raising a glass to the hospitality sector

15 March 2021 - Elizabeth O'Hanlon

It is well known that hospitality and tourism industry has been one of the hardest hit sectors over the last 12 months. With the announcement that limited opening will be allowed from 12 April 2021, Sarah Healey Pearce, Business Advisory Director looks at whether the developments over the last few months have been sufficient to get this sector back on its feet, and what businesses can do to keep their customers’ glasses full.
Get a clear plan in place
The staged recovery plan or roadmap announced by the government at the end of February has laid out how and when hospitality and tourism businesses will be able to start opening up. This guidance should not only help with the logistics of what to have in place and when, but will also boost consumer confidence after the latest period of lockdown. Setting up processes that focus on safety and good hygiene will be key as people are encouraged back into gardens and outdoor spaces, and then – finally! – the phased opening of indoor establishments.
What financial help is there for this sector?
Throughout the last twelve months of the pandemic the government has offered a limited package of financial help for affected businesses in the hospitality and tourism sector, although some argue that this has not been extensive enough. The ‘Eat Out to Help Out’ scheme was largely seen as a success, and some hoped that the Chancellor would repeat the scheme (or something similar) at the end of this latest period of lockdown.
However there is some good news, and the recent Budget introduced or extended a range of measures to support leisure and hospitality businesses and encourage spending, which included:

  • An extension to the Coronavirus Job Retention Scheme which will now go on until 30 September 2021, although businesses will have to contribute towards employees’ wages from 1 July
  • The reduced rate of VAT rate of 5% will be extended to 30 September 2021 with a rate of 12.5% applying from 1 October through to 31 March 2022 before the main rate of 20% kicks back in from April 2022
  • Duty on beer, spirits, wine and cider has been frozen for the second year in a row
  • Business rates relief has been extended to 30 June 2021 which will be followed by relief at 66% from 1 July through to 31 March 2022, with caps in place based on property values
  • Restart grants (through local councils) will be available for up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses and £6,000 for non-essential retail
  • A further fund of £425m will be released to local authorities for discretionary business grants
  • A new government backed Recovery Loan Scheme will be made available to replace the Bounce Back Loan, Coronavirus Business Interruption Loan and Coronavirus Large Business Loan Schemes which are all now coming to an end

These schemes will certainly ease the some of the pressures on leisure and hospitality businesses, and help with short term cash flow, but it is consumer demand that will be the make or break factor, and any further delays to the roadmap will almost certainly prove to be fatal for some businesses.
Has new technology helped?
As restrictions eased in the late summer last year,  many businesses benefited from investing in technology which allowed their customers to check in online, manage bookings and even order food digitally, and this trend will no doubt continue to develop. Not only will this help consumer confidence as part of a wider raft of safety measures, but it may also lead to staffing and process efficiencies.
Looking forward with optimism
The last twelve months have been brutal for this sector. Hospitality and leisure businesses have all been forced to close their doors, but many have found new ways of adapting their business model to find other areas of income whilst shut down.  Pubs, cafes and restaurants that have continued to trade by creating takeaway versions of their menus, and doing deliveries to their local customers, or branching off into supplying other products such as wine or local produce have all generated business and great publicity. Whilst it may not be practical to continue all of these activities once their main trade reopens, those that are able to continue to do so may well bring in some additional income, certainly in the short term.
As we approach the warmer months, it is very much hoped that we will see an improvement in customer demand and confidence. Many months of lockdown, the vaccination programme and a reluctance to travel overseas mean that the UK bookings cork may be about to burst out of the bottle. Add to this the financial measures offered by the government to ease pressure in the short term, and it may just be the moment for hospitality and tourism businesses to raise a glass to a bumper summer.

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