Vertical Markets

Reinventing hospitality sector in covid-19 world

by Mark Rowe

The next month will be crucial to the survival of a large part of the UK’s hospitality sector, industry figures have warned. They say the industry, which includes bars, hotels, restaurants, clubs and live events, has just one month left before even the largest companies start running out of money.

The sector is seen as crucial to the country’s economic recovery. When the economy briefly opened up in summer 2020, almost all the GDP growth reported came from eating and drinking out and a boom in domestic ‘staycations’.

“I don’t think it’s been as bleak as it is now,” Kate Nicholls, Chief Executive of UK Hospitality, told an online event hosted by the business group Resilience First, and Edwardian Hotels. “One in five companies only have enough cash to get them through until March,” she said. “The industry is burning through half a billion pounds a month staying closed.”

Kate estimates as many as a third of hospitality businesses may not reopen, with 660,000 jobs lost since mid-November 2020.

“The government wants rapid recovery and no one is faster than hospitality in bouncing back if we have the right support,” she said. “But the biggest challenge right now is just surviving. If you can’t survive, then you don’t have a recovery and everything else is moot.”

She called on the government to come up with a clear, staged exit strategy linked to the vaccine rollout and which recognised places like hotels were “incredibly safe” with COVID protocols in place.

Jean Devlin, Partner at Control Risks, said earlier that there was “much to be sombre about” with her research showing the UK hospitality was unlikely to get back to 2019 levels “for several years”. However, Jean told the event there were grounds for optimism if ways to reduce social distancing could be found.

“The vaccine roll out will be crucial to this as the hospitality sector really stands to benefit,” she said. “Research shows a very strong pent-up demand for travel, initially within the UK, but we expect more intra-European travel to open up over the course of the year with long-haul starting to become more commonplace among countries where there are higher vaccination rates.”

If restrictions are eased, the sector is well placed to make a quick recovery, according to Darren Carter, Head of Security at Edwardian Hotels.

“We are a resilient, agile industry because we meet the changing demands and needs of people on a daily basis,” he said. Darren added that hygiene practices in responsible businesses were largely COVID compliant because they were already working with risks like norovirus.

But he warned there were practical implications that could make “powering up the machine” difficult.

“This will require a huge investment of time and money across the industry in preparing a large number of people who adopted a very different way of life over the last year,” Darren said. “Skills have been lost and returning to work will cause disruption to what is now their normal home life.”

Kate also warned that large events could be cancelled late into 2021 – like Glastonbury music festival was recently – even if widespread immunisation continues.

“Those kinds of events require a long lead time to organise and at the moment we don’t have line of sight beyond the end of March,” she said. “Also, it’s very difficult to get insurance because the Government can’t commit to a timeline and lots of events have been cancelled last minute. Without insurance you have to cancel.”

Kate cited examples of the Southampton Boat Show and London theatres, which last year were given the go-ahead but had to keep their doors closed at the last moment.

To view the webinar, visit Resilience First’s Youtube channel. Resilience First with Intel is running a series of seminars in March on de-carbonisation; more at https://www.resiliencefirst.org/events/decarbonisation-and-role-technology-webinar-series.

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