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:
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.
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.