Time for leadership: The GBCC action plan for hospitality

Greater Birmingham Chambers of Commerce

The challenge facing the hospitality sector

The hospitality sector is the lifeblood of any local economy, writes Henrietta Brealey, director of policy and strategic relationships at Greater Birmingham Chambers of Commerce.

It is so much of what makes this region such a great place to live, work, visit and do business for each of us. It is also a significant employer, accounting for 54,000 jobs (pre pandemic) in the Greater Birmingham & Solihull LEP area alone. Taking into account the wider supply chain and related industries, in practice it is significantly more.

The COVID-19 pandemic has brought about unprecedented disruption for the sector. In September, research by hospitality industry bodies showed that 23 per cent of their members think their businesses will fail by the end of the year without further Government support.

On average, firms in the study believed that their workforce will be 25 per cent lower by February 2021 compared to February this year. That would signal a loss of around 675,000 jobs in 12 months.

Meanwhile, media reports suggest that further restrictions for the sector are imminent in some parts of the UK and likely to follow in future for others as COVID cases rise. To date, the Government response has been reactive – what the hospitality sector needs now is a clear vision and plan on both short term measures and the longer term support that will be put in place to enable them to recover in the New Year.

As Tracey Stephenson, co-founder and joint MD, Staying Cool explains:

"Trading is very unpredictable at the moment. Visitor numbers in August were buoyed up by domestic leisure tourism and Eat Out to Help Out. Pupils are now back at school but guests are not travelling for business and the cancellation of almost all events means demand is at an all-time low.

 “We are almost exclusively dependent upon transient leisure guests seven days a week. Any additional restrictions on the city's evening leisure economy will reduce visitor numbers further. While revenue is taking a beating, our cost base remains static, especially rent which is our biggest expense.

 “We won’t see a full recovery until Q3 next year, assuming vaccination starts in January. It will take two to three years to recover the losses of 2020.” 

 The GBCC Action Plan for Hospitality:

When Boris Johnson stood in front of the nation on 23 March and declared a national lockdown the country was (understandably) unprepared for and uninformed about this new and rising threat.

While safety and saving lives remains top of the agenda, over 6 months on and after hundreds of millions of pounds of investment from businesses in becoming “COVID-secure” we are in very different place. Local track and trace data for Birmingham shows just two per cent of contacts for confirmed cases were through eating out, hospitality and entertainment venues.

The Greater Birmingham Chambers of Commerce are calling on the Government to take urgent action to:

• Take an evidenced based approach to measures:
  • Urgently review the 10pm curfew - ensure that the scientific evidence for its impact on COVID transmission is substantial and offsets the damage being done to health & wellbeing as the significant impact on the hospitality sector leads to further job losses
  • Ensure any further restrictions on hospitality sectors are supported by local track & trace data indicating the source of rising infection rates
• Make local support meaningful:
  • Expand access to the proposed “local lockdown” grants to businesses that can legally remain open but are clearly expected to be significantly impacted by any local measures
  • Introduce additional tiers of higher value central government grants for businesses with higher rateable values and enable businesses with particularly high fixed costs or falls in revenue to also apply to local authorities for top up grants
  • Increase the value of the discretionary grants funds being made available via local authorities in the event of significant local measures to ensure that the most impacted businesses receive meaningful support through the autumn and winter
• Expand VAT relief: extend existing relief measures for the hospitality sector through to at least the end of Q3 2021 and expand them to include cold food consumed onsite and alcoholic beverages
• Diffuse the rent time bomb: protections from eviction for commercial tenants are set to end in the new year. Introduce tax credits to incentivise landlords to offer rent waivers to businesses in difficulty and extend business rates relief measures for the most impacted sectors through to at least the end of Q3 2021
• Support Jobs: recognise that the new Job Support Scheme is unlikely to be a viable option for the majority of the hospitality industry. Extend access to the current “flexible furlough” scheme into the New Year for businesses that can demonstrate that they were viable pre-COVID-19 and are currently severely detrimentally impacted by COVID-19 measures - including in the event of additional local measures  
• Provide longer term certainty: restore confidence in visiting city centres and returning to the workplace and business meetings - safely. Bring forward a clear roadmap on future COVID measures, the circumstances under which they would be implemented and, crucially, the support for businesses that the Government will put in place if/when each stage is activated

 Anne Tonks, MD at Opus, explains why these measures are needed.

"We seem, as a country, to be in an endless cycle of reaction rather than planning. Our hospitality venues are buffeted by ‘restriction creep’ -  momentum begins to build only to be stopped by further restrictions that are poorly thought through and are causing more harm than good. The lack of evidence-based restrictions that target hospitality cause huge frustration, uncertainty and leads us to question the logic.

• The reversal of encouraging people to return to work seems highly questionable after many business leaders invested a great deal of time and money to make work places safe. It has made our city centre a ghost town.
• Calling time at 10pm is arbitrary and has ensured that large groups of people now leave venues at exactly the same time, creating crowds, which is counter productive. The impact of the curfew on our restaurant is the difference between having a pre and post dinner drink and guests do not have a leisurely evening; the experience is diminished as is our spend per head.

Hospitality cannot be under one umbrella…. There are distinct differences between restaurants, bars and clubs and these need to be recognised. Emerging from total lockdown was always going to lead to greater risk of spread. That’s where a robust track and trace system should have come in. The majority of hospitality venues have been superb at compliance, but are now the victims of government failures.

The flexible furlough scheme has been fantastic, but the JSS [Job Support Scheme] may not help us to avoid a cliff edge. Continuing a form of flexible furlough scheme is a far more realistic support for our industry.

Again the VAT reduction and rates holiday have been a significant help to our cash flow and viability, but it must not stop here – the reality is that it must continue for the length of this crisis and during the long and difficult recovery process.

While many of us are legally allowed to be open, it is not viable that we open to our pre-Covid levels of hours. Further support is critical to us, especially where we are restricted by additional local constraints. Getting support to the local authorities who can use discretion for support is vital, as is tapping into and working with local knowledge in order to formulate a strategy.

The Greater Birmingham Chamber of Commerce truly have their finger on the pulse and have been so supportive to all types of businesses throughout this crisis. Their calls on VAT, rental support, go right to the heart of what it will take for pubs and restaurants to survive.

We need a robust, logical strategy for re-opening the economy with a  clearly communicated plan for how and when extra measures for Covid protection would need to be introduced. We are working blind at the moment and it is a disaster for planning, controlling costs and  most vitally, retaining the dedicated tremendous team we employ.

The disappearance of our venues due to lack of appropriately targeted support or a well formed plan doesn’t bear thinking about. We in hospitality have worked hard to create a secure, healthy environment to give guests the confidence to return to the city centre and enjoy the much needed sociability of going out and interacting, under Covid secure guidelines.”

What happens next?

The GBCC are committed to helping #KeepBusinessMoving. We are working with regional stakeholders such as local authorities, LEPs and the WMCA to promote the needs and concerns of our members. Together with the British Chambers of Commerce and the Chamber network, we are constantly lobbying on their behalf.

We will continue to escalate our members’ needs and concerns as well as adapting ourselves to offer the most relevant support to businesses.

If your business or sector is being impacted by COVID-19 please contact your relationship manager or KBM@Birmingham-Chamber.com.