Coronavirus: ‘Hospitality was the first hit, the hardest hit and will suffer for the longest’

UK Hospitality has published the worrying results of the first comprehensive survey of the hospitality sector during the COVID-19 pandemic.

Around 11% of industry businesses remain open mainly in the (takeaway) restaurant sector, contract catering and hotels. To put it another way nearly 90% of the entire sector is closed and the remainder is operating at substantially reduced levels.

For the survey, businesses were asked about their experiences of accessing loans, insurance claims, the speed of grant payments and workforce issues. A number of flaws in the level of support have come to light. Around half (48%) of businesses have applied for loans, but the majority of those receiving a response (57%) have had their bids turned down. Government-imposed State Aid rules account for over a quarter (26%) of rejections, alongside banks telling business to exhaust their own capital first (28%).

“Hospitality was the first hit, the hardest hit and will suffer for the longest,” said UK Hospitality CEO Kate Nicholls. “These findings lay bare the extra work that needs to be done by governments, banks and landlords to make sure as many businesses as possible can survive this crisis. Hospitality was the first hit, the hardest hit and will suffer for the longest, and Government support needs to reflect these facts. Hospitality businesses will be key to recovery as prolific employers, major tax contributors, and hubs for social interaction.”

Nearly three-quarters (74%) of businesses have claimed, or intend to claim, for business interruption insurance. However, their chances of success appear limited: alarmingly, fewer than 1% of businesses that have claimed have received pay-outs. Only around a quarter of eligible businesses had received hospitality grants, which falls significantly short of Government estimates. UKHospitality has been urging for these loans to be expedited and extended to more businesses.

Kate added: “Governments across the UK have provided unprecedented support to assist hospitality through this crisis, and that is extremely welcome. Yet, we are in this for the long haul. Everyone is rightly looking to how the economy and the industry restarts in a way that avoids a return of this horrific pandemic. Before we get to recovery, we need to make sure that the support measures already announced are getting through to business.

“Loans must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings.”

In terms of workforce, redundancies have been kept to a minimum (2%), with the majority of businesses furloughing staff, accounting for 84% of sector employees. This demonstrates the huge success of the Government’s job retention scheme, and the need for it to be extended as the recovery begins.