Talking Trade

“Hospitality and the late night sector are not out of the woods yet.” — UKHospitality’s Kate Nicholls

UKHospitality’s Chief Executive Kate Nicholls explains how the UK hospitality industry has fared having opened several weeks before our own.

This Spring, the Restaurants Association of Ireland ran a virtual Hospitality & Tourism Expo entitled ‘Reopening in Covid-19 World: The Evolution of Health & Safety’ at which UKHospitality’s Chief Executive Kate Nicholls was the Key Speaker.

During her presentation Kate mentioned that as the UK were a few weeks ahead of Ireland in reopening, the UK’s experience could serve as a useful indication of how things might progress in hospitality here and that we could perhaps learn from the UK hospitality industry’s experiences – good and bad – subsequent to reopening.

There have been a number of major reopening dates variously marked in the UK so far this year.

“Due to the devolved Governments here, we’ve experienced differing reopening dates across the UK,” Kate explains, “In England we saw outside areas open from the 12th of April, inside opening with restrictions from the 17th of May and – following a delay – the removal of all restrictions on the 19th of July. Wales saw almost all restrictions drop on the 7th of August with Scotland following on the 9th.

“No matter where in the UK a hospitality business operates, however, the months of closures and restricted trading have had devastating results. During the course of the pandemic hospitality businesses lost £100 billion in sales, highlighting that sustained support is needed in order for the sector to fully recover.”

The most recent data suggests that well over 7%, or 70,000 venues, remain closed as a result of Lockdown.

“Of this number, independent venues are struggling the most, with 11% still shut despite the lifting of restrictions,” she says, “For those that are able to open their doors, trading is still below what we would expect for this time of year and while consumer confidence is improving, many venues are struggling to get fully back on their feet.”

Nevertheless, she’s seen a strong consumer appetite to return to hospitality venues since outdoor reopening in April.

“This has been extremely encouraging, however we’re yet to see sales return to pre-pandemic levels and businesses are simultaneously having to navigate other issues.”

Staff shortages

“Staff shortages are now a real problem with our members reporting a 10% vacancy rate, implying a shortage of 210,000 roles and there are supply chain issues as well – 94% of hospitality businesses are experiencing problems, with about two-thirds of those saying some goods simply don’t arrive. This means less choice for consumers and lower sales for operators at a time when every penny counts as never before.”

Staff and supply shortages remain major issues for the UK hospitality sector, with vacancy levels running at over 210,000 workers.

In the meantime the UK government has offered a number of supports to the sector.

“The main forms of support over the last 18 months have been the furlough scheme, VAT reduction, the business rates holiday and rent moratorium,” says Kate, “Overall, while not perfect, together these measures offered much of the sector the financial breathing space to survive during long periods of closure and restricted trading. However, long-term challenges as a result of the pandemic still remain and the industry therefore needs ongoing support.

“It’s crucial that the Government looks to reform the Business Rates system under which hospitality currently overpays by £2.4 billion each year – and to permanently lower the rate of VAT for the sector.”

“At the same time suppliers and hospitality businesses alike are facing enormous challenges to their staffing and supply chains and are working together to minimise the impact to consumers,” she explains, “Our figures show that 94% of hospitality businesses are experiencing problems, with about two-thirds of those saying some goods simply don’t arrive, thereby severely undermining sales.”

Covid Certs

The need to produce a Covid Certificate is no longer a requirement for everyday hospitality.

“As things currently stand in the UK, there’s no requirement for people to provide proof of a negative test or vaccination to eat and drink indoors,” explains Kate, “However the Government has committed to introducing ‘vaccine passports’ for nightclubs and live music venues in England at the end of September, while a similar requirement will be introduced in Scotland for nightclubs and large football matches; live music venues and nightclubs are already struggling more than most and such measures would bring further challenges and significant costs to a hard-hit part of our industry.

“Mandatory vaccine proof for venues will also undoubtedly lead to a rise in illegal events where proper health and safety measures are – at best – routinely ignored and more often totally absent.

“Moreover, vaccine passports are not only costly and questionable as to their effectiveness but stifle the spontaneity that’s so crucial to so many enjoyable experiences in our sector.”

Loan legacies

On a brighter note, progress has been made around the problems arising from the rent and loan overhangs incurred during Lockdown.

“The Government has announced an extension of the rent moratorium measures as well as debt-recovery actions and the introduction of an arbitration process to guide settlements between landlords and tenants. These measures are wholly welcome and will banish a grim shadow that has hung menacingly over hospitality since the Covid crisis began.

“The legislation will form a strong bedrock for negotiated and fair settlements that can help heal the damage that the pandemic has wrought and is a hugely positive signal that the Government has been listening to our sector and acted to share the pain.”

Consumer confidence

Back in April she reported that confidence in visiting pubs and late-night venues is catching up with other venues: “Members are now much more positive about the future of the hospitality sector, with over half feeling optimistic about the next 12 months (54%) compared to 12% of members last November”.

She brings the situation up-to-date: “We’ve continued to see growth in confidence in the sector compared to last year. Recent CGA data shows that 56% of customers visited a hospitality venue in the first four weeks following reopening compared to just 35% over the same period last Summer,” she explains, “In addition, 45% who hadn’t visited a venue yet said they planned to by the end of August.

“However, 16% of nightclubs and almost 30% of large venues still remain closed. While we expect to see this increase as life returns to normal, discussions of vaccine passports will do little to boost confidence in the sector.

“Hospitality and the late night sector are not out of the woods yet.”

UKHospitality has focused its marketing drive around the ‘experience’ now as opposed to the ‘safety’ of outlets` since the role of safety has dropped down consumer priorities.

“Safety remains a core concern for us and our members, as it was before the pandemic,” she states, “CGA data shows that during last year’s Summer reopening safety was the top concern for consumers and how well venues followed regulation was the key deciding factor for consumer choice of venue. However, we have seen a return to pre-pandemic preferences since reopening on July the 19th and safety, while always important, now again ranks below price, quality and staff experience to consumers when deciding which venues to visit.”

Businesses unable to reopen

Despite the undoubted progress that has been made, Kate thinks it likely that one-third of businesses there will not be able to reopen at all.

“Unfortunately, thousands of hospitality businesses have had to permanently close their doors as a direct result of the last 18 months,” she comments, “With thousands still in a precarious position despite reopening, it’s more important than ever that Government continues to work with the industry to ensure that we can continue to drive economic recovery on both a local and national level.”

Last April the sector reported losing 12,000 businesses over the last year, almost one in five of its restaurants, as well as a 10% contraction in the accommodation businesses and a 7% contraction in pubs and bars.

Fortunately the situation has slightly stabilised since venues were allowed to fully reopen. However, hundreds of businesses continue to close every month due to a range of ongoing factors.

“Supply and staff shortages are crippling businesses at the moment, forcing even large operators to reduce trading hours or even temporarily close some venues. It’s imperative that the government work with us to help solve these problems and implement measures that continue to support our industry as we look to support hospitality businesses and workers.”

In this, the UK hospitality industry is on the same page as ourselves.

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