Although many sectors have been hugely affected by the COVID crisis, the hospitality sector is surely the one which follows the ebbs and flows of the nation’s restrictions most closely. The Government has provided relief to businesses in the form of Business Rates holidays, VAT rate reductions, Grants, the Eat Out to Help Out Scheme and Furlough funding.
In addition, they’ve provided preferential lending through CBILS and Bounce Back loans. However, borrowed money still needs to be paid back and should only be used as a “sticking plaster” for short term working capital issues. Ten months down the line from the start of this crisis, this is not a short term problem and hospitality businesses desperately need some certainty to navigate their way out of this crisis.
Support for hospitality businesses
City centre hospitality businesses appear to be the worst affected, with many offices closed and passing trade at an all time low. Although tourist destinations experienced a short term boost throughout July to September, the fixed costs throughout the Winter period are mounting up and they normally rely upon Easter trading to bring their cashflow back on track.
It's unlikely we’ll get certainty on reopening dates for this sector whilst the Government combats new variants and focusses on the vaccine roll out programme. Even once the main lockdown is removed we’re expecting to see a slow removal of restrictions with hospitality businesses continuing to be impacted.
It’s for this reason that many trade associations are calling for a raft of further reliefs for this sector. The most sensible in my opinion are for the Government to extend the VAT reduction for the sector past 31 March 2021, a further year of Business rates holiday and an extension to the furlough scheme whilst restrictions persist. If we don’t see further reliefs then research suggests we could see 650,000 hospitality sector businesses at risk of closure, particularly those on the high street and those reliant on business tourism.
Assuming that domestic restrictions are lifted over the Summer then we’re likely to see tourism destinations benefitting from a reluctance to go abroad and a “staycation” peak. This is what many businesses are holding on to as the silver bullet to reset their finances, but in the meantime this sector needs more support from the Government.
For further information on the support measures available to your hospitality business, please get in touch with Richard Andrew on 01539 942030 or email help@armstrongwatson.co.uk where one of our team will be happy to help you.
