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The Coronavirus Crisis: Hospitality Industry Pushed Towards Catastrophe

Stephen Delahunty reports on why the Chancellor’s £330 billion rescue package for businesses won’t be enough to stop the hospitality industry from going under due to the outbreak of COVID-19.

The Coronavirus Crisis
Hospitality Industry Pushed Towards Catastrophe

Stephen Delahunty reports on why the Chancellor’s £330 billion rescue package for businesses won’t be enough to stop the hospitality industry from going under due to the outbreak of COVID-19.

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Industry bodies in travel and leisure, hospitality, and the night-time economy have warned the Government that it is risking millions of jobs as businesses struggle to cope with the economic catastrophe caused by the rapid spread of the Coronavirus in the UK.

While industry leaders welcomed Chancellor Rishi Sunak’s £330 billion rescue package this week, which included a one-year break from business rates as well as grants of up to £25,000 for struggling retailers and pubs, they stress that it is still not enough.

Despite the economic measures, the pound completed one of its steepest declines in living memory yesterday as markets fear huge swathes of the economy will still have to be bailed out.

With social distancing plans in place to stop the spread of the virus, the wider travel and hospitality sector looks set to be hit the hardest, impacting millions of people dependent on casual contracts and self-employed work.

The British Beer and Pub Association (BBPA) is calling for further urgent interventions to keep pubs from closing. Despite initial Government relief, pubs urgently need liquidity measures in order to pay wages and prevent thousands from closing, with the subsequent loss of hundreds of thousands of jobs. 

An open letter to the Chancellor from the industry outlines that, without immediate and decisive action to create cash and liquidity, thousands of pubs will be unable to pay staff wages and could be forced to close this weekend – before the initial Government relief ever reaches them. 

24 Hours from Catastrophe

As a priority, the BBPA is asking the Government to underwrite at least 75% of wages for all pub and brewing staff, enabling employers to pay staff during this period of uncertainty – at an estimated cost of £1 billion. 

In addition, the BBPA is asking the Government to cancel excise duty and VAT payments that pubs are due to pay on 25 March and 31 March respectively. This will enable pub operating companies across the country to redirect much needed cash directly into their businesses and to underwrite all insurance costs for business interruption for a period of at least three months for the pub sector. 

The BBPA’s CEO, Emma McClarkin, said that the industry is in crisis and needs urgent intervention to prevent catastrophic job losses and irreparable damage to the sector.

“We recognise as a sector that we are in unprecedented times,” she said. “We are prepared to play our part, but whilst we welcome the measures outlined so far by the Government, they do not deal with the immediate cash flow and liquidity crisis our industry faces now. As a sector we cannot stress enough that the Government has just 24 hours to create a pub specific package to prevent irreversible closures and job losses.”

The Night Time Industries Association (NTIA) has warned that 85% of jobs could be at risk in a wider sector that employs more than three million people and is worth around £140 billion.

The NTIA’s CEO, Micheal Kill, said: “There are still serious implications for staffing and the self-employed. It seems insurance plans are only going to be relevant to large companies. When Ireland closed down the hospitality industry, 85% of jobs were lost so we all have to come together. We don’t need drip-feed politics, we need the Government’s best package first time, otherwise it looks like they are not prepared.”

UK Hospitality has also urged the Government for an employment support plan to help protect livelihoods and the one million-plus jobs now at risk in bars, coffee shops, contract catering, hotels, nightclubs, visitor attractions and other leisure venues – without delay.

The group is urgently calling for an immediate package of employment support for businesses within the next 24 hours to preserve at least one million jobs that will otherwise be cut as employers face the prospect of making mass redundancies in order to survive.

“While the extra measures will give many companies a lifeline, the massive issue remains people and preservation of jobs,” said Kate Nicholls, CEO of UK Hospitality. “What was announced by the Chancellor will not stop job losses as companies will be very worried about taking loans to pay staff when they have zero income – for many, it just isn’t viable. This is about helping individual people to preserve their employment status and to avoid the already-straining welfare system.”

Travel association ABTA said that the UK travel industry is facing a crisis of unprecedented scale, which is impacting hundreds of travel businesses and many thousands of their customers.

Mark Tanzer, ABTA Chief Executive, said: “We need to see some of the measures made immediately available to travel businesses and further clarity on how businesses will be able to access these loans. The existing financial protection structures and processes designed to protect UK consumers were not designed to cope with the demands that are currently being placed on them.”

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